Cutting benefits and taxes could help solve the global worklessness crisis by encouraging more men into jobs, the International Monetary Fund (IMF) has said.
More training and childcare support would help more women into work, while higher pension ages can keep more older people in jobs.
It comes amid fears Britain is being held back by the 9.25 million adults of working age who are economically inactive – those who are neither in work nor looking for work.
Of these, 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.
Without radical action to boost productivity the world faces a dire slump in economic growth, the global watchdog warned.
“Reduced unemployment benefits and lower labour taxes are associated with higher participation for men of prime working age,” the IMF said in its World Economic Outlook.
“For women, an expansion in secondary education enrollment has a positive association with future participation rates. Similarly, labour market programs (such as retraining and reskilling) and childcare programs appear to be supportive.”
GDP growth is on course to slow to just 2.8pc per year at the end of the decade, around a quarter slower than the pre-pandemic average. In the UK, growth is not expected to be sustained at above 2pc for any meaningful period.
This threatens painful consequences for governments which are already struggling with mounting debts and pressure to spend more on pensions and healthcare.
Critical to boosting growth and prosperity is getting more people into work and ensuring they move into the most productive industries and companies.
As well as encouraging more people to take jobs, the IMF also said more migration can help boost the economy and offset the effects of the ageing population.
The IMF 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.”
Other economic reforms could help the private sector become more productive, making better use of the workforce and the available financial resources.
While the US has successfully increased productivity over time, other countries have struggled to match this performance and need new policies to grow more quickly, the IMF said.
Poor industrial strategies can prop up unproductive businesses at public expense, the analysts warned.
“The unproductive firm may be politically connected and receiving subsidies or tax breaks that allow it to operate on a larger scale than its profits merit,” the IMF said.
Slashing subsidies and cutting red tape could help, while boosting international trade can also force companies to become more competitive, the IMF said.
Disclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.
