Two: Employment: tackling poverty through ‘work for those who can’

Labour’s strong focus on employment is rooted firmly at the historical heart of the party. Full employment is still clearly an aspiration. However, New Labour’s approach to employment policy represents a departure from previous Labour governments: both the approach to achieving full employment and arguably the motivation have changed. After the high levels of unemployment in the 1980s and early 1990s recessions, Labour was cautious about pledging a commitment to full employment. However, shortly after Labour came to power, a new definition was put forward. In a speech launching his first pre-budget report in November 1997, Chancellor Gordon Brown stated that:

We need a new approach – Employment Opportunity for All – to face the challenges of today’s dynamic labour market, creating a modern definition of full employment for the 21st century. (HM Treasury, 1997)

The emphasis, therefore, shifted from employment for all to employment opportunity for all.

Brown identified five vital elements needed to meet the new challenge:

  • a framework for macroeconomic stability;

  • a flexible and adaptable labour market, underpinned by minimum standards;

  • skilled and adaptable people;

  • policies which encourage people to move from welfare to work; and

  • a tax and benefit system that makes work pay.

One of the main departures is the greater emphasis on supply-side policies; for example, helping people become more employable, search for work, equip themselves with marketable skills, provision of financial incentives to seek and remain in work and more conditions placed on many out-of-work benefits with greater coercion to find work. In the past, Labour placed more emphasis on demand-side policies, viewing unemployment as a problem of lack of demand which could be stimulated through a variety of policies.

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