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Compliance Study: United Kingdom

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Microeconomics - Score: +1

"We pledge to carry out practical reforms consistent with the specific situation in each of our countries, aimed at achieving a high level of employment and widely-shared prosperity: these include tax and social system reforms that ensure 'work pays' particularly for the least well off; lowing social security charges which place a burden on low-skilled jobs, in countries with high indirect labour costs and improving public employment agencies."

The labour market in Britain has undergone very significant changes under the long tenure of the Conservative government and this has been reflected in the very low unemployment rates compared to the other major EU countries. The unemployment rate fell from an average of 8.3% in 1995 to 7.3% in 1996. However, the significant gains have been at the end of 1996 and by the first quarter of 1997, the unemployment rate had fallen to around 6.2%.

The unemployment rate is now lower than the average for the G7 which averaged 6.9% in 1996. It is difficult to gauge the source since both the labour force participation and employment rates in Britain are well above the average for the G7. The participation rate in Britain in 1996 was 78.0%, well above the 66.1% average for the G7. The employment rate was 72.2% also well above the 61.5% average for the G7.

On June 5, 1997, the UK Government launched a program to increase labour market flexibility throughout the European Union. Finance minister Gordon Brown set out a three point initiative entitled "Getting Europe to Work". Brown further stated that any new social or employment initiatives should only be adopted if they meet the test of boosting productivity, creating job opportunities and promoting labour market flexibility.

On May 29, 1997 Prime Minister Blair and U.S. President Clinton launched a joint initiative on job creation whereby the two governments will use their consecutive presidencies of the G7 to promote a shared agenda based on investment in education, flexible labour markets, welfare reform and partnership with business.

The new Labour Government is committed to a program called Welfare to Work whereby the Government aims to move 250,000 young unemployed people from welfare to work and to provide new opportunities to the long-term unemployed. The Chair of the Advisory Task Force was named by Chancellor Gordon Brown on June 5, 1997.

In a speech to the Confederation of British Industry (CBI) on May 20, 1997, Chancellor Brown commented on the importance of equipping the British people to cope with change. In support of this initiative, Chancellor Brown said that the Government's commit to aiding this transition was a long term commitment encompassing initiatives in education, business, and trade all leading to increased productivity and employability.

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