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Unemployment and Tax Credit

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The term ‘Social Problem’ appears to be an extremely difficult one to define, with no universal, constant or absolute definition. Indeed, the Penguin Dictionary of Sociology (2000, p.326) mentions that ‘the definition of a social problem is fraught with difficulty for a variety of reasons. (1) Cultural relativism means that what is a social problem for one group may be nothing of the sort for the other. (2) Historically, the nature of social problems has changed over time…(3) There is a political dimension, that the identification of a problem may involve one group in the exercise of social control over another.

’ However, contrary to this many attempts are made at defining the term. One such attempt defines a social problem as ‘a social condition that a segment of society views as harmful to members of society and in need of remedy. Another such attempt at explaining the phrase states much more simply that a social problem is ‘a condition of society that has a negative effect on a large number of people’.

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The aim of this essay is to discuss the social consequences for both individuals and the communities in which they reside of prolonged period of unemployment. Unemployment is a word not so easily defined as many may consider the unemployed to be individuals not in employment, ill or undergoing full time education there are certain members of society who are not employed but do not have an interest in work, should these individuals be considered unemployed? A sociologist defines unemployment as ‘ a part of an economic idea, referring to those people who are theoretically in the labour market, that is potentially competing for jobs and thus affecting the price of labour, but who do not actually have jobs’(C.Crouch, 1999). During this essay I will examine the possible cause of unemployment, the social consequence as a result of unemployment, and the government response in tacking unemployment Social Construction: Who are Unemployed

The social group most likely to suffer from the lack of employability are youth, ethnic minority, the Over 50’s, women and people suffering from disability Youth

Young people are a group particularly vulnerable to and affected by unemployment – subsequently responses to youth unemployment has been a major focus for debate and policy reform. Unemployment experienced by young people however is short lived, yet when they do enter the job market there seems to be very few avenues to explore. Since the 1980’s, the demand for youth labour has declined noticeably, largely due to the decline in the manufacturing industry, which relied heavily upon school leavers as a source of labour. The increase in flexible, part time casual work has also contributed to the disappearance of many jobs once available to young people. Such decline in manufacturing has resulted from the growth of multinational corporations relocating overseas to reduce labour costs, which has meant that the need for a more highly skilled workforce is paramount. Another reason leading to youth unemployment is the internal markets that recline within firms – there tends to be less reliance on school-leaver recruitment, as the firm-specific skills are often composed of knowledge of the organisation, its production system, organisational goals as well as technical expertise, (R MacDonald 1997).

Deakin (1996) points out that young people who are disadvantaged in some way, and may be harder to train, will be considerably less attractive to employers and training providers(R.Macdonald,1997). Labour Force Survey 2011 shows unemployment rate for 16- to 24-year-olds has risen sharply in the current recession, from 15% in 2008 to 19% in 2009 and then to 20% in 2010 (ONS 2012). However, the rate had already been rising for a number of years before the recession, from 12% in 2004 to 15% in 2008. These rises have collectively more than offset the falls during the 1990s and, as a result, the unemployment rate for 16- to 24-year-olds in 2010 was actually higher than its previous peak in 1993 Ethnic Minorities

Members of racialized minorities are highly vulnerable to unemployment especially younger people. Ethnic minority groups experience disadvantages in a number of areas for example, employers attribute characteristics to Afro-Caribbean and Asian applicants which are used to exclude them from better jobs (Wrench and Lee, 1978). Teachers stereotype Afro-Caribbean boys as lazy, troublesome and non-academic, Asian boys and girls as hard-working but over-ambitious (Brah, 1986; Mirza, 1992 cited in Modood, T. et al, 1997)


Source: Labour Force Survey, ONS

From this graph it is apparent that unemployment of women has been increasing since 2008. It could therefore be assumed that in future years the gender gap will be eradicated, thus removing any chances of closing the wage gap in the labour market between genders. Hakim states “Most women have actively colluded in their own imprisonment in unpaid work in the home and low-paid, low status jobs in the workforce” (Hakim, C. 1991 p101). By this Hakim suggests that it is the choices that women make, that determine their roles in society and ultimately in the workplace.

Social Perspective: The Cause of Unemployment
In order to fully understand unemployment we must consider the causes. In a modern mixed economy there are many factors that contribute to unemployment. Firstly, the development of new technology has contributed majorly to the increase of unemployment. ‘Automation has removed the need for many unskilled and semi-skilled manual jobs and many non-manual jobs have also been hit’ (K.Browne , 2002). During the peak industrious times, car makers such as Ford and GM made full use of manual labour in all their car factories. Employees stood alongside a conveyer belt performing their designated task. However, as technology progressed so did the car production method. Ford and GM both implemented robotics into their method of production as a result the need for unskilled workers vanished due to the simple fact it was more cost effective to use machinery to manufacture cars and only highly skilled engineers will be required to maintain the machinery. The decline of the manufacturing industry and the rise of globalisation are also major reasons for the rise of unemployment.

As western countries such as Europe and USA advanced in industry and technology their economies grew rapidly and so did their standards of living. This was generally viewed as a positive aspect resulting from economic growth but due to the higher standards of living the cost employment increased significantly this resulted in increased competition from the eastern countries such as Japan which could supply cheaper goods. Western companies needed to find cheaper labour in order to compete; this led to companies moving factories overseas to countries such as China or Taiwan. This move has drastically decreased the job market leaving thousands unemployed over the years. In addition, the rise of globalisation has made it easier for countries to trade good and services allowing more companies to search for labour overseas, thus increasing the unemployment rate in their home countries.

Anthony Giddens (1973) argued that an ‘underclass’ is made up of people partaking in the lowest paid occupations, being semi employed or “chronically unemployed, as a result of a disqualifying market capacity of a primarily cultural kind” (cited in Oxford Dictionary of Sociology:678). And so, the term ‘underclass’ is in the most part referring to a class experiencing a type of social exclusion, suffering from unemployment and poverty, and in hierarchical terms, lying below the working class. Unemployment is said to greatly influence stratification in present-day Britain.

“The view that the long-term unemployed constitute part of a growing underclass in British society has become increasingly popular in both political and academic circles.” (Gallie 1994:737) There are two differing conceptions of the ‘underclass’: Radical and Conservative. The conservative view is that the personal characteristics and work attitudes if the unemployed themselves results in their unemployment, whereas the radical views the unemployed simply as victims of their own circumstances. Rapid technological change which results from the development of capitalist societies brings about changing labour requirements created recurrent unemployment. Thus forms a segmented labour force of two parts: a stable core of workers and a secondary type of workers who are characteristically ‘hired and fired’. “Such secondary workers become locked into a position of labour market disadvantage”. (Gallie 1994:738) There may well be a number of people who are somewhat poorer that the general working class majority, but as Fulcher (1999) points out, “They are part of the fragmentary class of manual workers; they are not a separate and distinct social class”. (fulcher 1999:634) .

Policy Response
New Labour first reform towards tacking unemployment was the introduction of ‘New Deals’ in 1997. “New Labour had pledged that during its first term in office it would help to find jobs for 250,000 18-24year olds who had been out of work for over 6months.” (Ellison and Pierson 2003, Pg116.) This type of new deal for young people (NDYP) was given priority, less well-resourced New Deals were also introduced for long-term unemployed, lone parents and people on disability benefits. In 2001 programs had also been added for those aged over 50 and the partners of the unemployed. Ellison and Pierson explain the objectives of the New Deal where to “increase long-term employability and help young and long-term unemployed people, lone parents and disabled people into jobs. [Secondly] improve their prospects of staying and progressing in employment.” (Ellison and Pierson 2003, Pg116.) What is different about New Labour’s ‘New Deal’ is that “the provision of support is tailored to the needs and circumstances of client groups. Programs are specific to target groups.” (Adler 2004, Pg96.)

The New Deals approach requires that all new claimants attend a work focused interview. Each claimant is given a personal advisor who helps tackle employment barriers and provide assistance with job search, careers advice and guidance. “By the end of 2001 more than three-quarter of a million unemployed young people had entered the program.” (Ellison and Pierson 2003, Pg118.) In the case of the New Deal for lone parents and people with disabilities participation remains voluntary, but attendance at the work focused interviews is now mandatory. The New Deal has been successful and was New Labour’s centre piece to rebuilding the welfare state around work. In March 2000, Tony Blair announced what was arguably the most radical step in his governments social security reforms when he merged the benefits agency and the employment service into a single point of contact for working age people. The working age agency.

The new ‘jobcentre plus’ agency would “embed a culture of rights and responsibilities in the welfare system [and] personal advisors will steer clients towards work or training.” (Hansard 2000 in Ellison and Pierson 2003, Pg122.) The point of the ‘jobcentre plus’ regime was to deal with a claimant all in the one place. Firstly the claimant would contact a ‘benefit financial assessor,’ then he or she would meet a personal advisor whose task it is to assess employability and provide employment assistance. This means that the claimant must actively seek work and must enter one of the New Deals after a specific duration of employment. In 2000 New Labour announced it was going to once again reform the system of benefits in the UK. This was going to involve an integrated child tax credit (CTC) and a working tax credit (WTC). These two new types of tax credit were introduced in April 2003 and a new pension credit was introduced in October 2003. The WTC replaced the working families tax credit and the disabled persons tax credit. It was “intended to assist people, with or without children, who are in low paid employment.” (Adler 2004, Pg100.) The new WTC and CTC were very important in the reform process as there are now two sources of support for children; the universal child benefit and the means-tested child tax credit. Another important feature of the child tax credit and working tax credit is that they build on the framework of the WFTC and the DPTC, however as Adler explains “They differ from them and indeed from all social security benefits in that there will no longer be any capital limits acting as a limit to eligibility.” (Adler 2004, Pg100.)

The New Deal programme on its own would not be sufficient. Thus in October 1999 the working families tax credit (WFTC) was introduced. To qualify for WFTC “The claimant had to have one or more children living with them, the claimant had to work for at least 16 hours a week, he or she had to be a resident in the UK and entitled to work there, and have a capital of less than £8,000.” (Adler 2004, Pg98.)

In general unemployment has a negative effect on both individual and society. However, society tends to have a wider range of consequences as a result of unemployment. Unemployment does not only negatively affect the financial situation of an individual and society but there very livelihood. A sociologist states ‘ it reduces the variety of life, removes the satisfaction of work, makes the day structure less, diminishes social contacts and damages self esteem’(.Fulcher and J.Scott, 2007). The longer an individual or society remains unemployed the more severe the consequences will be and the less likely they will return to employment. Some of the policies used by the government have been very effective, however some not so much. Increased spending on education and training has been quite effective, as it has helped people learn new skills and helped increase incentive for people to work. The minimum wage has been effective in some ways but not in others. The minimum wage has definitely increase the supply of labour, as people would be more willing to work at a higher wage and this is shown by the reduction in unemployment. However higher wages mean some firms may not be able to keep as many workers at the new wage, and ultimately may have to sack employees.

So the minimum wage has its good and bad points. Another way the government has tried to increase willingness work is by introducing the new deal, some see this as a failure some don’t. Overall figures show it has got people into jobs, however youth unemployment has risen during this time. Also there is a question over whether the people who got jobs through the new deal would have got jobs anyway without the help of the new deal. There is also a criticism over whether the government introduced the new deal to cover up unemployment figures. Finally I would recommend that the government carry on with the policies which have been successful such as increased spending, lower taxation, as well as trying to curb inflation along with interest rates and introducing more incentives for people to work, such as schemes similar to the working families tax credit.

Cite this Unemployment and Tax Credit

Unemployment and Tax Credit. (2016, Oct 16). Retrieved from https://graduateway.com/unemployment-and-tax-credit/

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