British Labour Market Performance: The Market-Oriented Approach

Abstract

"In recent years, the United Kingdom has been remarkably successful in reducing unemployment. The standardized unemployment rate fell from 10 percent in 1993 to 6 percent in 1998, and most observers agree that further reductions can be achieved in the years to come. Also with respect to employment, the British economy outperformed the German and most other European economies. The decline in British unemployment cannot be attributed to changes in the national definition of unemployment, but is also confirmed by internationally standardized statistics. Furthermore, it can at best partly be explained by short-term cyclical fluctuations. The recovery of the labour market mainly resulted from a market-oriented policy approach which encompassed the liberalization of product markets, the reduction of union power and comprehensive reforms of the tax and social security system. Due to increased flexibility, the British economy was able to cope with deindustrialization without rising structural unemployment. A basic precondition of structural adjustment in the labour market was a significant wage dispersion, which allowed the creation of low-paid service sector jobs. The British income distribution is less equal than the German one, but in return total unemployment is lower. Moreover, income mobility is higher, i.e. low-paid British workers are facing rather promising opportunities for attaining higher-paid jobs." (Author's abstract, IAB-Doku) ((en))

Cite article

Klodt, H. (1998): Großbritannien: Die marktwirtschaftliche Strategie. In: Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Vol. 31, No. 2, p. 277-293.