`Family friendly' job polices help women get work

BRITAIN'S LABOUR market is much more flexible than had been assumed, with "family friendly" employment policies cutting the jobless rate among women, according to a Bank of England study to be published this week.

Phil Evans of the Bank's Structural Economic Analysis Division argues that increased flexibility among employers has eased the process of returning to work after childbirth.

As a result, the so-called "natural rate" of female unemployment - that is, the rate of unemployment which is consistent with a stable rate of inflation - may have fallen.

Mr Evans argues that Family Credit may have also helped lower the rate of unemployment by encouraging women with young children to return to work rather than to remain on state benefit.

But the paper stops short of arguing that "family friendly" policies have lowered the unemployment rate for the economy as a whole.

The key issue is whether women who return to work have simply been displacing men - an issue which, according to the author, needs further research.

A separate study by the Bank addresses the commonly held notion that wages fail to fall at times of falling labour demand.

Many economists believe that when economic conditions are tough, employees are often unwilling to accept a pay cut, and that this inflexibility means job losses are higher than they need to be.

However, Anthony Yates, also of the Bank's Structural Economic Analysis Division, argues that there is little evidence to support this. "The empirical evidence leaves the case for downward rigidities at best unproven," he says.

Both studies will feature in the Bank's Quarterly Bulletin, published on Wednesday along with the August Inflation Report.