Labour immobility Geographical immobility · Challenges in moving/traveling to work from one area to another · Caused by; - Lack of awareness of available jobs - Desire to remain in one location - Lack of available/affordable housing (e.g. in London & SE) Occupational immobility of labour · When workers are not able to transfer from one occupation to another · Affected by; - Lack of appropriate skills/training - Lack of time to train/retrain . This is likely to reduce in time, to some extent Labour immobility & structural unemployment · Particularly occupational immobility · When a pattern of demand and production changes, workers will be left unemployed in markets where demand has shrunk . The demand for labour is a derived demand . This causes structural unemployment - workers may not be able to move into a different occupation/area when they are left unemployed/without a job due to the decline of their particular industry Government policy aimed at reducing immobility . Governments will intervene to correct market failure - in this case labour immobility . They can try to tackle both geographical and occupational immobility · With geographical immobility; - Help with job centres and information about available jobs - Relocation subsidies and housing programmes e.g. key worker programme in SE - Relocating industry to areas of high unemployment, grants to firms - Regional policies · Occupational immobility; - Education and training programmes . Tax rates can also be cut A UK skills crisis? . UK has lower labour productivity than USA, France, Germany etc . Thus, British output will be lower/British workers will have to work longer to achieve the same level of output . One possible reason for this is Britain's relative lack of skills in its labour force · 16.4% of adults in England can be described as having "very poor literacy skills" - wouldn't pass an English GCSE and are below the ability of an 11-year-old! . Britain also lags behind in other skills and education attainment levels - at the same time, the skills demanded of an employee are rising
Education and training policies · Reform of GCSES and A-levels, national curriculum · Emphasis on transferable skills and vocational qualifications e.g. apprenticeships · Numeracy and literacy strategies . Free schools and Academies? Improving Labour Market info · Careers information at schools - required by law · Employment services e.g. homes direct · Government job centres Regional Policies · Targeted at areas of high unemployment and depression e.g. the North · Grants for new investments, tax breaks for businesses etc · Subsidies to encourage employment · Spending on infrastructure . Aimed at improving economic conditions in that area . Gov. can make it harder for businesses to set up in areas where unemployment is low e.g. London & SE Cutting marginal tax rates . Belief that this will create a great incentive to work · Supply of labour could be increased · Reduces the replacement ratio . Depending on the amount a cut in income tax