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Job fund cuts a concern, says think-tank

One of the world's leading think-tanks has expressed concern over government decisions to curtail funds aimed at getting the unemployed back into work.

In its annual Employment Outlook report, the Organisation for Economic Cooperation and Development (OECD) predicted that the rate of recovery in the UK will be too muted to result in strong job creation and that unemployment is likely to recede only slowly.

The report said: "As a result, the UK unemployment rate is expected to remain at nearly 8 per cent at the end of 2011."

It went on to highlight concerns over moves in the emergency Budget to reduce funding for labour-market stimulus: "While the large fiscal deficit makes it essential to focus on cost-effective programmes and target the most disadvantaged groups, labour-market policies should remain adequately funded. In this context, it may also be of concern that the new budget ends funding for two crisis measures - the future jobs fund and the six month offer."

The future jobs fund, which subsidises job placements for 18- to 24-year-olds, and the six-month offer, which ensures training for those out of work for more than six months, were dropped by the coalition government in the first tranche of spending cuts.

The OECD report added: "Effective re-employment assistance has prevented an even sharper increase in UK joblessness and should be reinforced even in the current context of fiscal consolidation.

"One of the reasons the UK labour market has weathered the recession relatively well is that unemployed jobseekers have been better able than their counterparts in past recessions to find new jobs."

Elsewhere in the report, the OECD estimated that unemployment in the developed economies may have peaked but that 17 million new jobs were needed to reclaim pre-recession employment levels.

The think-tank urged that job creation should be a priority for governments.

Angel Gurria, the OECD's secretary general, commented: "High joblessness as the new normal can not be accepted and has to be tackled by a comprehensive policy strategy."

The OECD put forward proposals for tax breaks and recruitment subsidies, along with increased investment in training, as a means of tackling the problem of chronic joblessness.