Government urged to slash benefits and taxes to get more people into work as 9.25m unemployed, IMF says
The Government is being urged to cut taxes and benefits in a bid to lower the worklessness crisis
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The Government is being urged to cut taxes and benefits in a bid to lower the worklessness crisis.
Cutting taxes and benefits could encourage millions of unemployed men to find a job and lower worklessness, an economic thinktank has found.
The International Monetary Fund (IMF) research stated there is an “urgent need for policies” to boost the working economy.
Their analysis of 38 OECD industrialised economies, including the UK, US and Germany, recommended that higher pension ages would also keep people in work for longer.
They also suggested more training and childcare support would help more women into work.
The latest figures have shown unemployment levels in the UK have risen to a record high of 9.25 million.
The Government is being urged to cut taxes and benefits in a bid to lower the worklessness crisis
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These are Britons who are unemployed but not seeking a jobs.
More than a fifth of UK adults aged between 16 and 64 are economically inactive, according to the Office for National Statistics (ONS).
Mel Stride, Secretary of State for Work and Pensions, has promised to “do whatever it takes to get Britain working”.
He said: “While our inactivity rate is lower than many economic heavy weights including the USA, France and Italy, our tax cuts and welfare reforms will grow the labour force by 300,000 people – growing the economy and changing lives.”
The IMF report warned that the world faced a dire slump in economic growth and would need a change in policy to boost productivity.
In its World Economic Outlook, the IMF said: “Reduced unemployment benefits and lower labour taxes are associated with higher participation for men of prime working age.”
Brendan Clarke-Smith, former Conservative Party deputy chairman said: “It's nice to see some actual sense from the IMF for a change.
“I couldn't agree more with the idea of tackling worklessness by cutting benefits and our own reforms from the Department of Work and Pensions have certainly been very welcome.”
Of the 9.25 million adults of working age who are economically inactive, 2.7 million are long-term sick, 2.6 million are students, 1.6 million are looking after their home or family, and 1.1 million have taken early retirement.
An Institute of Economic Affairs spokesman said: “Since Covid we seem to have been experiencing a benefits-enabled disengagement from work from some groups.
“Changing the incentives could well induce many to put aside worries about personal problems and actively seek work.”
There are around 700,000 more claiming benefits than before the pandemic, the ONS figures published last month showed.
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Last month Mr Stride unveiled plans to make 150,000 people signed off work with mild mental health problems get back into work.
He gave the warning that the “normal ups and downs of human life” risked being labelled as a medical condition.
The nation's response to tackling mental health issues may have “gone too far” with the “normal anxieties of life” being labelled as illnesses, he added.
As well as encouraging more people to take jobs, the IMF said more migration can help boost economies and offset the effects of the ageing population.
They said: “Policies designed to facilitate the flow and integration of migrant workers, alongside measures to boost labour force participation among older workers in advanced economies – through retirement reforms and labour market programs – could mitigate the increasing demographic pressures on labour supply.”