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Last Updated: Tuesday, 3 May, 2005, 17:49 GMT 18:49 UK
Challenge of 'hidden unemployed'
BBC Wales Business Editor Gareth Jones
By Gareth Jones
BBC Wales Business Editor

Job Centre sign
The government has launched schemes to return people to work
David Morgan was never without a job until three years ago when he was made redundant as a road sweeper in Merthyr Tydfil.

Told at subsequent interviews he was too old for another job, the 50-year-old became depressed.

For some time, Mr Morgan was on incapacity benefit, he said, "because of his nerves".

He had given up looking for another job and had become a statistic - what is known as "economically inactive".

But then at his local benefit office he came across a project called Working Links, which specialises in getting people back to work.

Funded by government and private money, it offers the services of consultants like Leanne Sollis to help the long-term unemployed back into the Labour market.

In 2003, 975,000 or 42.2% of people aged 16 or over in Wales were economically inactive (37.5% for the UK as a whole)
448,600 or 25.8% of people of working age in Wales were economically inactive (22.0% for the UK as a whole)
Of 12 UK regions, Wales has the third-highest rate of economic inactivity, behind the north east of England (26.5%) and Northern Ireland (27.9%)
Source: Welsh Local Labour Force Survey

Ms Sollis said: "David just needed someone to listen.

"Because of his severe stammer, potential employers would lose patience with him".

But after some one-to one-coaching on interview technique and help presenting his CV, Mr Morgan now works as a security guard.

"I am very happy," he said.

"Even if I lose this job, I am hopeful I could get another one."

Inactivity is one of the biggest problems the Welsh economy faces, yet it has not become a major issue in this general election campaign.

The latest figures show there were 448,600 economically inactive people in Wales - more than one in four of the potential workforce of 1.7m people.

Getting these people back into work represents a major challenge and an important way of boosting Wales's economic performance.

Wales has a higher rate of economic inactivity than most other UK regions, although the UK government has emphasised the success it has had in reducing unemployment.

Unemployment rate in Wales - 4.3% (down from 4.6% over year)
Unemployment rate in UK - 4.8%
Long-term unemployment (12 months or more) in Wales - 21.4% of the unemployed (UK average 20.2%)
Youth unemployment (among 16 to 24-year-olds) in Wales - 12.4% (UK average 12.3%)
Unemployment rate in west Wales and Valleys - 5.1%
Unemployment rate in east Wales - 3.6%
(Figures to February 2005)
Source: Welsh assembly/Labour Force Survey

But according to David Blackaby, Professor of Economics at Swansea University, more needs to be done to tackle inactivity.

He said: "Government has done well addressing unemployment with all its huge social costs.

"But employment hasn't increased much and better policies are needed on inactivity."

About three quarters of economic inactivity is explained by people looking after the family home, students and long-term sickness.

People who are unskilled, older and who live in the upper valleys of south Wales are more likely to be inactive.

Compiling a report for the Welsh assembly, Mr Blackaby's team found that the economically inactive of Wales were amongst the least likely in Britain to want to work or to be looking for it.

There has also been research suggesting that there has been a shift: people once classed as unemployed are now claiming incapacity benefit instead, leading some to say it is a form of "hidden unemployment".

Generic picture of coal miners
Many in Wales have not worked since the mining industry's collapse

There are also claims that more generous payments under incapacity benefit lead some to exaggerate their illness and avoid unemployment.

Whatever you call it, the problem remains a blight on society and represents wasted lives and opportunities.

The current government strategy to reverse inactivity aims to make work more rewarding and help people find work tailored to individual needs.

Its Pathways to Work pilots, including one in Bridgend, were introduced in 2003.

They offer a whole package of support, including a personal adviser to help claimants refocus on work, but differ from schemes like Working Links, which are voluntary.
Merthyr Tydfil had the highest inactivity rate amongst Welsh local authorities (33.2%) and Flintshire the lowest (19.3%)
West Wales and the valleys had an economic inactivity rate of 27.5% while the rate in east Wales was 22.7%
In Wales, 57% of people with a disability were inactive compared to 48% in the UK
In most local authority areas, the main reasons given for economic inactivity were long-term sickness and looking after the family home
Source: Welsh Local Labour Force Survey

Another arm of the strategy is a plan to abolish incapacity benefit and replace it with payments which more actively encourage work.

Giulia Faggio, of the Centre for Economic Performance at the London School of Economics, said: "Restricting access to incapacity benefit should help keep a lid on the problem, while the Pathways to Work pilots, which have a compulsory element, seem more likely to produce successful results than other entirely voluntary approaches."

While the issue of the economically-inactive has been largely ignored in this campaign, it is a stubborn problem which will require a major government effort, whoever wins on 5 May.


The Conservatives said they would "deliver radical welfare reform" by allowing the commercial and not-for-profit sectors to provide welfare-to-work schemes that "help people into real jobs".

Labour said its target was employment opportunity for all - "the modern definition of full employment". The party added it would move more people from welfare to work with its long-term aim to "raise the employment rate to 80%".

Liberal Democrats
The party said it would "tailor" the assistance given to jobseekers so they receive the support needed to find "proper, permanent work". The Lib Dems added they would "cut red tape" for small businesses to allow them to create more jobs.

Plaid Cymru
Plaid has called for economic opportunity to be spread across all parts of Wales and has launched a plan to increase levels of economic activity and to provide a variety of career opportunities so young people in Wales have "the choice of staying in, or returning to, their home communities".



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