Latest news with #worklessness
Telegraph
4 days ago
- Business
- Telegraph
How Spain's worklessness crisis made it harder to retire
Spain's economy floundered in the years following the financial crash, as a growing debt crisis and the end of a construction bubble triggered widespread redundancies. Worklessness swept across the country, with unemployment soaring to 26.9pc by 2013 as staff were laid off and businesses closed. But unemployment has since fallen to 11.4pc. In large part, this has been thanks to a concerted effort to get older people into work. Britain now faces its own worklessness crisis. Unemployment has jumped to 4.6pc and more than one in five people of working age are classed as inactive, a designation that covers people who are not looking for work because they are retired, studying, too sick or for some other reason. Much of the coverage of this worklessness crisis has focused on the high levels of young people not in education, employment or training (Neets). Yet one area where Britain could learn a lot from Spain is the country's efforts to get older workers back into the labour force. An estimated 280,000 people aged 50 to 64 stopped working in the UK between March 2020 and January 2023, with many too ill or taking early retirement. The economic activity rate for those aged 55 to 59 remains lower now than it was before 2020, at 75.4pc in the first quarter of 2024 compared with 77.8pc in the last quarter of 2019. The picture is very different in Spain, where the participation rate for 55 to 59-year-olds stood at 78pc at the start of 2024. Not only is it higher, but it is rising. The data contrasts with the stereotype of Spaniards being lazy, enjoying siestas and taking early retirement by the beach. In fact, more older Spaniards are in work than Britons and they are retiring later. This has helped to boost the Spanish economy, with GDP climbing by 3.2pc in 2024 and growth of 2.6pc is expected this year – figures that remain a distant dream for Britain. How has Spain done it? And could it work here? Madrid has taken a carrot-and-stick approach to getting more over-55s in the workforce. The carrot is more generous unemployment benefits. Since 2019, workers aged 52 and over have been eligible for unlimited unemployment assistance, which they keep receiving for the first six months they are back in work. Allowing benefits to overlap with earnings is meant to encourage people to seek employment, rather than just sitting on the dole. The stick is reforms to pensions that have made it more difficult to retire. 'Over the past decades, Spain has undertaken several pension reforms that are aimed at extending working life,' says Nina Ruer, a research analyst at think tank Bruegel. 'The statutory retirement age has been raised, the early retirement eligibility has been tightened and recently they linked the pension benefits to the years of [tax] contribution. All of this creates incentives for workers to stay in the workforce.' Spanish workers retire later in life than British employees in similar roles, according to a recent paper by the IMF. Professionals in the Mediterranean country have an average retirement age of 64, compared to just above 62 in the UK. The current retirement age in Spain stands at 66 years and eight months and is gradually being raised so that it reaches 67 by 2027. Spain's success in getting more older people into work begs the question: could the UK do the same? Successive British governments have tried to get more older people into work. Jeremy Hunt, the then-chancellor, said in 2023 that life for over-50s 'doesn't just have to be about going to the golf course'. However, policies to date have done little to shift the dial on participation rates. A significant driver of the UK's drop in the participation rate for older workers since the pandemic and the earlier age of average retirement is high levels of sickness and disability among over-55s. By comparison, Spain's population has lower rates of illness. It suggests that adopting similar reforms here may not yield exactly the same results. However, that's not to say that they couldn't help. Still, raising the pension age would be extremely controversial. Hunt shelved plans to raise it to 68 when he was chancellor, fearing an outcry. The state pension age is currently 66 and will rise to 67 between 2026 and 2028. Yet as Britain and most other Western countries grapple with an ageing population, governments may be left with no choice but to make it more difficult for older workers to retire early. '[Spain] is a country that has been experiencing ageing a bit longer than other European countries ... so I think they took steps to prepare for that and to increase this labour force participation rate,' Ruer says. Keeping older workers in the labour force has been a boon as more experienced employees are often more productive and drive business growth. Ruer adds: 'This really does help to grow the economy just by the fact that they stay in the labour market.'
Yahoo
17-05-2025
- Business
- Yahoo
Burnham closes in on hundreds of millions to tackle worklessness
Andy Burnham is closing in on a devolution deal with Rachel Reeves that could unlock hundreds of millions of pounds to help tackle worklessness in the North. The Mayor of Greater Manchester has been in talks with the Treasury and other government departments about expanding the region's £631m pot of flexible funding ahead of the Chancellor's spending review on June 11. Mr Burnham is pressing ministers for more control of traditional back-to-work schemes, as well as wider support to help people deal with other issues that prevent them from returning to work, such as debt, health and relationships. The Labour mayor has long called for job centres in Manchester to be absorbed into the city's planned network of 'Live Well centres', currently focused on issues such as health and housing, as part of a strategy to get thousands of people back into work. It is understood the Mayor is calling for powers to pool funding currently allocated to employment schemes into a more flexible pot that will allow him to focus on preventing people from falling into a life on benefits. Speaking to The Telegraph, Mr Burnham called for a 'more bottom-up localised approach rather than a top-down tick-box system' that he warned 'often doesn't move people towards work'. Mr Burnham said: 'The reason a lot of people don't move into work is not that they just can't access the right training, it's because they may have very significant worries about debt, or housing, or issues in their relationship. 'You've got to go first to dealing with some of those issues before you can, if you like, put people on a path towards work.' The proposal, to be revealed in June, could even see the Mayor take responsibility for flagship employment programmes such as the Restart scheme, which helps benefit claimants who are long-term unemployed to find work. Restart is the Department for Work and Pensions' (DWP) contracted employment support programme and is funded until 2026. It is run in Greater Manchester by a private sector firm called Ingeus. Details of the proposed deal come after the Chancellor handed Mr Burnham a so-called integrated settlement in the Budget, which is essentially one pot of funding that the mayor can choose to allocate as he sees fit. Angela Rayner, the Deputy Prime Minister, has also given Greater Manchester more control over employment schemes since the start of this year. It is understood that Alan Milburn, former health secretary and Labour adviser, has been helping to broker the talks, which at one point officials hoped could lead to a broader devolution deal with Oliver Coppard, the South Yorkshire mayor. However, those talks have now fallen away, with Mr Burnham racing to secure a new funding settlement ahead of Ms Reeves's three-year spending review in June. Mr Burnham is seeking extra cash as figures show that inactivity among working-age adults is higher in the North than the UK average. The North also has far higher school absence rates. Mr Burnham called for a 'very different approach' to tackle worklessness instead of 'funding employment support through large corporate entities that often don't get to the heart of what people want'. He said: 'You build up through local community and voluntary organisations, provide that whole-person approach, working with the work coaches at the DWP. 'It's about a bottom-up approach that's whole-system and whole-person, compared to the, I would say, the top-down, DWP approach that demonstrably hasn't worked over the years.' Ms Reeves is reviewing government departments' spending plans for the next three years, which will be confirmed at her June spending review. Labour is also facing a backbench rebellion over welfare cuts, with dozens of MPs warning the prime minister that his plans to slash the welfare bill by £5bn a year were 'impossible to support' without a 'change in direction'. The Treasury declined to comment. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Telegraph
17-05-2025
- Business
- Telegraph
Andy Burnham closes in on millions from Reeves to tackle worklessness
Andy Burnham is closing in on a devolution deal with Rachel Reeves that could unlock hundreds of millions of pounds to help tackle worklessness in the North. The Mayor of Greater Manchester has been in talks with the Treasury and other government departments about expanding the region's £631m pot of flexible funding ahead of the Chancellor's spending review on June 11. Mr Burnham is pressing ministers for more control of traditional back-to-work schemes, as well as wider support to help people deal with other issues that prevent them from returning to work, such as debt, health and relationships. The Labour mayor has long called for job centres in Manchester to be absorbed into the city's planned network of 'Live Well centres', currently focused on issues such as health and housing, as part of a strategy to get thousands of people back into work. It is understood the Mayor is calling for powers to pool funding currently allocated to employment schemes into a more flexible pot that will allow him to focus on preventing people from falling into a life on benefits. Speaking to The Telegraph, Mr Burnham called for a 'more bottom-up localised approach rather than a top-down tick-box system' that he warned 'often doesn't move people towards work'. Mr Burnham said: 'The reason a lot of people don't move into work is not that they just can't access the right training, it's because they may have very significant worries about debt, or housing, or issues in their relationship. 'You've got to go first to dealing with some of those issues before you can, if you like, put people on a path towards work.' The proposal, to be revealed in June, could even see the Mayor take responsibility for flagship employment programmes such as the Restart scheme, which helps benefit claimants who are long-term unemployed to find work. Restart is the Department for Work and Pensions' (DWP) contracted employment support programme and is funded until 2026. It is run in Greater Manchester by a private sector firm called Ingeus. Details of the proposed deal come after the Chancellor handed Mr Burnham a so-called integrated settlement in the Budget, which is essentially one pot of funding that the mayor can choose to allocate as he sees fit. Angela Rayner, the Deputy Prime Minister, has also given Greater Manchester more control over employment schemes since the start of this year. It is understood that Alan Milburn, former health secretary and Labour adviser, has been helping to broker the talks, which at one point officials hoped could lead to a broader devolution deal with Oliver Coppard, the South Yorkshire mayor. However, those talks have now fallen away, with Mr Burnham racing to secure a new funding settlement ahead of Ms Reeves's three-year spending review in June. Mr Burnham is seeking extra cash as figures show that inactivity among working-age adults is higher in the North than the UK average. The North also has far higher school absence rates. Mr Burnham called for a 'very different approach' to tackle worklessness instead of 'funding employment support through large corporate entities that often don't get to the heart of what people want'. He said: 'You build up through local community and voluntary organisations, provide that whole-person approach, working with the work coaches at the DWP. 'It's about a bottom-up approach that's whole-system and whole-person, compared to the, I would say, the top-down, DWP approach that demonstrably hasn't worked over the years.' Ms Reeves is reviewing government departments' spending plans for the next three years, which will be confirmed at her June spending review. Labour is also facing a backbench rebellion over welfare cuts, with dozens of MPs warning the prime minister that his plans to slash the welfare bill by £5bn a year were 'impossible to support' without a 'change in direction'.
Yahoo
17-05-2025
- Business
- Yahoo
Burnham closes in on hundreds of millions to tackle worklessness
Andy Burnham is closing in on a devolution deal with Rachel Reeves that could unlock hundreds of millions of pounds to help tackle worklessness in the North. The Mayor of Greater Manchester has been in talks with the Treasury and other government departments about expanding the region's £631m pot of flexible funding ahead of the Chancellor's spending review on June 11. Mr Burnham is pressing ministers for more control of traditional back-to-work schemes, as well as wider support to help people deal with other issues that prevent them from returning to work, such as debt, health and relationships. The Labour mayor has long called for job centres in Manchester to be absorbed into the city's planned network of 'Live Well centres', currently focused on issues such as health and housing, as part of a strategy to get thousands of people back into work. It is understood the Mayor is calling for powers to pool funding currently allocated to employment schemes into a more flexible pot that will allow him to focus on preventing people from falling into a life on benefits. Speaking to The Telegraph, Mr Burnham called for a 'more bottom-up localised approach rather than a top-down tick-box system' that he warned 'often doesn't move people towards work'. Mr Burnham said: 'The reason a lot of people don't move into work is not that they just can't access the right training, it's because they may have very significant worries about debt, or housing, or issues in their relationship. 'You've got to go first to dealing with some of those issues before you can, if you like, put people on a path towards work.' The proposal, to be revealed in June, could even see the Mayor take responsibility for flagship employment programmes such as the Restart scheme, which helps benefit claimants who are long-term unemployed to find work. Restart is the Department for Work and Pensions' (DWP) contracted employment support programme and is funded until 2026. It is run in Greater Manchester by a private sector firm called Ingeus. Details of the proposed deal come after the Chancellor handed Mr Burnham a so-called integrated settlement in the Budget, which is essentially one pot of funding that the mayor can choose to allocate as he sees fit. Angela Rayner, the Deputy Prime Minister, has also given Greater Manchester more control over employment schemes since the start of this year. It is understood that Alan Milburn, former health secretary and Labour adviser, has been helping to broker the talks, which at one point officials hoped could lead to a broader devolution deal with Oliver Coppard, the South Yorkshire mayor. However, those talks have now fallen away, with Mr Burnham racing to secure a new funding settlement ahead of Ms Reeves's three-year spending review in June. Mr Burnham is seeking extra cash as figures show that inactivity among working-age adults is higher in the North than the UK average. The North also has far higher school absence rates. Mr Burnham called for a 'very different approach' to tackle worklessness instead of 'funding employment support through large corporate entities that often don't get to the heart of what people want'. He said: 'You build up through local community and voluntary organisations, provide that whole-person approach, working with the work coaches at the DWP. 'It's about a bottom-up approach that's whole-system and whole-person, compared to the, I would say, the top-down, DWP approach that demonstrably hasn't worked over the years.' Ms Reeves is reviewing government departments' spending plans for the next three years, which will be confirmed at her June spending review. Labour is also facing a backbench rebellion over welfare cuts, with dozens of MPs warning the prime minister that his plans to slash the welfare bill by £5bn a year were 'impossible to support' without a 'change in direction'. The Treasury declined to comment.
