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“Permanent Scar” on unemployment levels, warns NIESR(03-Aug-2011)

The National Institute of Economic and Social Research (NIESR) in one of its recent reports has concluded that the unemployment levels in UK will be permanently higher than pre-recession levels even after the economy is back to full strength.

The unemployment in the UK in the region of  5% – 5.2%  before the economic crisis and the NIESR now predicts that structural unemployment that has pushed the unemployment levels will force this to remain at the current high levels of 6.2% even after the economy is back to its normal growth.

This has two major implications. Firstly it means that people will forever find it more challenging to find jobs as the competition from others looking for jobs will always remain at the current high levels and secondly there will be a permanent 300,000 people more on benefits – job seekers and also income support.

The NIESR’s economists also predict that the number of jobless cannot shrink any lesser than current levels without the inflation going up. In simple language, this means that companies spend more money for similar outputs which is just a fallacy. The IMF (International Monetary Fund) has commented that the UK’s structural unemployment has risen to 6.8% and at these levels there will be a permanent work force of about 2 Million people who are unemployed.

What is more alarming is that NIESR reckons unemployment will peak to about 8.3% next year. Eventhough this number is lower than the 10% of unemployment levels that the previous two recessions had, it has the danger of putting out an entire generation of people in an environment wherein there is constantly lesser jobs than the demand.

Stuart Boseley, Director of Best Insurance commenting on these latest figures said that the structural re-adjustments to the changing economic nature of the UK are going to be a painful. He feared that people in their mid-40s who have been in same jobs for decades and no experience outside of their core skills will find it very difficult to re-train. He said that though the government has introduced good apprenticeship schemes for the younger generation, the older generation cannot be ignored. He added that more and more people are choosing to buy income protection policies. It is more critical than ever for people to have adequate protection as the time gap between losing one job and finding another is always increasing.

Best Insurance is one of the leading providers of income protection insurance. They have a wide range of insurers and well trained advisors who spend a lot of time with their customers to understand each one’s individual situation and then offer the right product. Depending on the requirement such as accident and sickness only or accident, sickness and unemployment and other factors such as excess days etc, a choice of products is provided to the customers.