Structural jobs deficit must be tackled, says CBI

Employers' lobby group urges the Government to take action

The CBI today calls on the Government to tackle deep-seated structural unemployment which threatens to leave millions on the scrapheap without jobs.

The employers' lobby said the Coalition must put as much effort into acting on long-term unemployment, skills shortages and high levels of public sector dependency as it does into tackling the deficit.

A CBI report finds that unemployment is a far more complex question than is realised. It lists local economic performance, education, welfare dependency and the state of local infrastructure as some of the factors that complicate the national picture.

The report, Mapping the Route to Growth: Rebalancing Employment, argues that the decade of economic growth in the run-up to the financial crisis masked serious problems in the labour market. It adds that these issues will not be resolved by cyclical recovery and that the erosion of skills by long-term unemployment threatens to exclude millions from the job market at a huge cost to taxpayers.

John Cridland, the CBI's director-general, said: "The Government has rightly focused on tackling the structural deficit in the public finances, but it needs to apply the same rigour to attacking the structural jobs deficit.

"The boom years before the recession masked the extent of deep-rooted problems in parts of the labour market, including long-term unemployment and an unhealthy dependency on the public sector.

"These problems will not disappear with the economic recovery and, left unchecked, will have grave social and economic consequences."

Key findings of the report include:

* Unemployment does not follow a simple North-South divide and hopes that regional differences had closed since the 1990s were dashed by the recent recession.

* Areas with the strongest jobs growth from 2004 to 2007 had the biggest falls in employment during the recession, suggesting that job creation was not driven by improvements in the labour market.

* Those without skills will suffer more in future because Britain is expected to see a shift towards higher-skill jobs with demand for people with no qualifications falling sharply.

* Urban areas that suffer high rates of unemployment are generally post-industrial economies but they are widely spread and include Liverpool, Leeds, the North East, the West Midlands and South Wales.

* Reliance on public sector employment is high in Wales, parts of Scotland and Northern Ireland but less so in Cumbria, the Midlands and the South of England.

The report said youth unemployment was the biggest crisis facing the post-recession labour market. Since the start of the downturn, youth joblessness has risen sharply.

"All the evidence suggests that a failure to engage with the labour market early has a sustained scarring impact on individuals early in their lives," the report said.

The CBI has supported the Chancellor's fierce cost-cutting but has repeatedly called on the Government to put in place a strategy for growth to reshape the economy. It is seeking views to feed into its own proposals, which it will put to the Government later this year.

There are 2.46 million people unemployed in the UK but the total numbers mask deep problems, including five million working-age people on benefits and two million children in households where no one works.

Mr Cridland said: "The answer is not bussing people to where the jobs are. We need to tackle the structural causes of unemployment, while doing all we can to get the private sector motoring in all regions of the UK."