Challenges for Job Transition Service

The economic slow-down of recent months has left the claimant count hovering at just 4,800 more than the symbolically tantalising 1 million figure. Despite being the lowest unemployment level since December 1975, recent signs are not encouraging. Data released last month showed employment growth to have fallen very slightly - for the first time in 7 years.

Confidence has not been helped by a gloomy set of US economic data over the Christmas break followed by unemployment numbers released on February 2nd that confirmed a significant slow-down. With US unemployment rising suddenly from 4.0% to 4.2% pundits have started to fear that a recession might cross the Atlantic. They are probably over-pessimistic.

But the Government has started to privately worry about a downturn affecting Britain's industrial regions. These are Labour's electoral heartlands and, although this has considerable political saliency, the Government's concern is well intentioned. Manufacturing employment has been on the slide almost continuously since the election. In the last 2 years alone, industry has declined by 310,000 jobs - a fall of almost 8%. Over this period service jobs have more than compensated - growing by over million. However, this dislocating effect of so much change has started to tell.

Most of these lay-offs do not make the headlines. But large scale factory closures have recently loomed over steel making at Llanwern and cars at Dagenham and Luton and the Government has found this unsettling. At just 3 locations, up to 10,000 workers could lose their jobs - sending shock waves of secondary lay-offs and closures in supply industries that might see up to 6 times as many people also become jobless.

Displacement on this scale calls for a significant Government response.

But until recently, this has not appeared necessary with the claimant unemployment totals falling dramatically. Inflow to the count has declined from nearly 300,000 a month in mid 1997 to around 240,000 a month most recently. The inflow has been matched by corresponding outflows - the number of people losing their job and moving to another punctuated by a spell of unemployment - and has remained pretty stable over the last year.

However, the absolute decline in employment caused by job losses in manufacture are different. These jobs are in areas that do not have especially buoyant service sectors; displaced workers tend to be older and will face age discrimination; they will usually have had long spells of unbroken employment and possess high levels of industry-specific craft skills. These factors make it very much harder to switch from one kind of job to another.

That's why the Government has responded with a Job Transition Service that is based on the Employment Service's Rapid Response Teams that are parachuted into areas facing large scale redundancies (see page 10). But this approach has some flaws:

Lastly, the Government should get on with "Mature Apprenticeships". Ministers keep regularly hinting about Modern Apprenticeship-style frameworks for older workers. But the Employment Service might not be the best agency to fund and manage these experiments. Instead, the Learning and Skills Council should start delivering its mandate to ensure effective Adult Learning - rather than graft another training offer on to the Employment Service's mix of Occupational Training.