| In 1992 Unemployment in UK was 3 million, now in 2007 | | | | 4. Improvements in education and training. Through the |
| it is less than 1 million. | | | | New Deal the government has sought to give the |
| 1. Long period of economic Growth. The UK has | | | | unemployed training schemes which give them the |
| experienced 15 consecutive years of economic | | | | necessary skills to get a job. This has reduced |
| growth. Growth has averaged 2.5% which is close to | | | | structural unemployment. |
| the long run trend rate of economic growth. This | | | | 5. Increased Labour Market Flexibility. Compared to |
| means the economy has been operating close to full | | | | many EU countries the UK labour market is considered |
| capacity. Therefore there has been an increase in | | | | to be more flexible. E.g. it is easier to hire and fire and |
| demand for workers and a reduction in demand | | | | workers. This encourages firms to set up business. |
| deficient unemployment. | | | | The power of trades unions has continued to decline |
| 2. Benefits more difficult to claim The government has | | | | this helps reduce real wage unemployment. However |
| made it more difficult to claim Job Seekers Allowance. | | | | in the 1992 little unemployment was being caused by |
| (JSA) The other method of calculating unemployment | | | | trades unions, so this factor is not so important. |
| is the ILO Labour Force survey. This suggests | | | | 6. New technology. E.g. internet has made it easier for |
| unemployment is actually more like 4.7% rather than | | | | people to find work. Improved technology has also |
| 3%. Also the level of unemployment benefits have | | | | created new industries which have taken on workers. |
| been index linked (increased in line with inflation) | | | | In conclusion the most important reason is the long |
| Therefore benefits have become less attractive | | | | period of stable, sustainable economic growth. This has |
| compared to wages, therefore there has been a | | | | given firms the confidence to invest and take on new |
| reduction in voluntary unemployment. | | | | workers. However as well as the demand side the UK |
| 3. Reduction in geographical unemployment. In recent | | | | economy has seen improvements in the supply side. |
| years areas that used to be economically depressed | | | | Notably e.g. a better educated workforce and a more |
| (South Wales, Northern Ireland, North East) have seen | | | | flexible labour market. |
| increased investment and economic growth | | | | |