Tuesday, March 08, 2011

IDS on unemployment

Ian Duncan Smith argues that, "It's not the absence of jobs that's the problem. It's the failure to match the unemployed to the jobs there are."

But according to the government's own statistics, even if the problem of matching workers to jobs was overcome and every single vacancy in the UK were filled, there would still be rather a lot of people unemployed.

Supply-side enthusiasts would argue that this is because workers are pricing themselves out of the labour market. Leaving aside the minimum wage, in the UK there were 5.2 people unemployed for every vacancy in Dec 2010. Does anyone seriously imagine it is possible for people to absorb the sort of pay cut that firms getting five workers for the price of one would entail?

If I'm missing something please explain in the comments below.

Via: FR

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