OECD lukewarm on job policies

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The Organisation for Economic Co-operation and Development gave a lukewarm assessment of the Government's jobs policies yesterday.

In its annual Employment Outlook it backed the UK's new emphasis on improving education and skills. But the organisation, a fan of the jobs market deregulation, singled out the flexibility of the UK's labour market for praise.

The report predicted this meant UK unemployment would fall to 5.6 per cent on the internationally accepted definition next year, one of the lowest jobless rates among the 29 member countries. By contrast, it expected German and French unemployment rates to fall very little from their current heights.

The report admitted: "Many workers are trapped in a cycle of low pay and no pay."

But it warned there was "scant" evidence that either a minimum wage or extended top-up benefits for the low paid, both of which the Labour government plans to introduce, would improve work incentives and relieve poverty.

The Budget is unlikely to do much to reduce unemployment, according to a separate report published by the Council of Churches yesterday. It concluded that providing good quality work for all who wanted it would require a much bigger increase in public spending than the schemes financed by the windfall tax.