Flexibility 'is no cure for unemployment'

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A FLEXIBLE workforce will be insufficient to solve the problem of unemployment, according to a report by the independent Employment Policy Institute, writes Robert Chote.

The study warns that although government efforts to promote flexibility appear to have helped the economy to generate part-time jobs in the past year, there has been little or no growth in the volume of employment as measured by total hours worked.

The EPI said that the US was right to emphasise in its submission to this week's G7 job summit in Detroit that expansionary policies are needed to boost demand for jobs in the world economy, as well as taking measures to make supply more flexible.

Employers are increasingly repackaging full-time jobs into part-time jobs, the EPI argues. This allows employers greater scope to adjust employment to demand for their goods. Rates of pay are often lower for part-time workers while national insurance payments can be avoided if the workers are paid below the qualifying threshold.

The EPI said it was inconsistent for the Government to argue that compulsory job-sharing was an ineffective way to eradicate unemployment, but not to appreciate that de facto job-sharing through a growth of part-time work was equally inadequate.

A separate pamphlet by Demos, another think-tank, argues that unemployment needs a wide variety of policy responses. These include improvements in the education system to make people more flexible as employees and to allow them to return to education at all stages of their life.

It also says taxes should be imposed on consumption, property and energy, rather than employment, while tax incentives should be used to foster an active market in education and training.