Improving employment prospects: building on past reforms

While employment growth has accelerated, allowing unemployment to fall significantly since 2005, many low-skilled workers are still unemployed and the duration of unemployment spells is still long. The introduction of an in-work benefit for workers in low-income households, subject to a minimum of hours worked, could lower barriers to higher employment which result from a relatively high tax wedge on low-skill workers, as would the elimination of poverty traps in the pension system. Measures to improve mobility of workers across regions, notably housing policy reform, would lower long unemployment durations, as would the provision of more training to the unemployed. Impediments to higher labour market participation of young women and older workers need to be removed.