Britain has more jobless households than any other major European country as nearly one in eight British homes – 11.5 per cent – has no adult in employment.
A report by the Centre for Policy Studies says a whole section of the United Kingdom population derived no benefit from the boom years of 1992-2007 and remains stuck in a so-called benefit trap.
The report, More Producers Needed: Why Tackling Workless Households Can Lead to Growth, says “privatising socialised households” will transform the economy and create growth.
But its publication coincides with an analysis by auditors PwC (formerly Price Waterhouse Coopers) that planned public sector cuts and job losses will add a further 500,000 to the already predicted half a million redundancies to bring total job losses to at least a million by 2015.
At 11.5 per cent, Britain has the highest proportion of adults in workless households of the six largest European Union economies – Spain has 10.8 per cent, France 10.5 per cent, Italy 10.4 per cent and Germany 9.2 per cent.
The Centre for Policy Studies report says “unproductive and poorly-performing households” should be directed to work in the private sector and calls for “sanctions on benefit claimants for non-compliance with training and labour market programmes”, localised labour market programmes which reward local authorities for getting workless families into work and cutting low-skilled immigration where possible.
Many of the areas with the highest proportion of jobless households also face some of the greatest hardships under the new round of public sector job cuts.
Northern Ireland, already showing signs of being worst hit by the economic downturn and which is unusually dependent on the public purse, is expected to see 5.2 per cent of its workforce out of work.
North-east England, Wales and Scotland are also expected to be especially badly hit by job losses, while in London and the south-east 230,000 (3.1 per cent) are expected to lose their jobs.
PwC said the gross impact of the intended budget cuts of £113 billon, according to ONS and HMRC figures – will slash about £46 billon from British output by 2014-15, but that there is some job creation potential in the private sector if public bodies and departments outsource many of their functions.
John Hawksworth, chief economist at PwC, said the overall economic impact “could be mitigated by increased labour market flexibility on wages and hours worked” as in 2008-9.
Almost 50,000 public sector jobs have already been axed according to the latest figures from the Office for National Statistics. The number of people employed by the taxpayer fell by 22,000 to 6.05 million in the three months to June following a 24,000 drop in the first quarter of this year.
