The Beveridge Curve

Hello PPMA bloggers

This week I’m taking a look at the correlation between unemployment, jobs and skills. This is natural extension from ground we covered at the PPMA conference 2010 and the theme of the conference – the Global Skills Race.

Many leaders and mangers are currently focusing on how to make cuts and efficiency gains faced with financial austerity in the public sector. Whilst this is quite understandable and necessary, there is danger however, that it is myopic thinking, insufficiently strategic in approach – inadequately linked to proper comprehension of economic forces.

Enter the Beveridge Curve. The curve is named after William Beveridge (1879 to 1963). The Curve, expressed as a graph, portrays the relationship between the percentage of the workforce unemployed and the number of job vacancies (i.e. unfilled job).

Essentially the Beveridge Curve shows that if workers and jobs available match up well there are few job vacancies when the unemployment rate rate is high, and a high vacancy rate when unemployment is low.

If unemployment reduces without a significant increase in the number of job vacancies, then the labour market is becoming more efficient because workers are finding new employment from the stable vacancy pool more quickly and remaining unemployed for a shorter period of time.

If however, the number of job vacancies increase whilst unemployment remains constant, this shows that those people in the labour market who are unemployed may lack the skills required for new job vacancies that are being created. Enter the Global Skills Race.

The US is beginning to witness an adverse impact upon it’s own economic situation associated with the Beveridge Curve. Martin Hutchinson, for the Business Section of the Daily Telegraph, 16 April 2010, reports on the phenomena of a deteriorating Beveridge Curve and the implications for the US economy. Long-term unemployment in the US has doubled over the past year as unemployed workers are struggling with the requisite skills to fill the new job vacancies being created. If this trend continues it will have a devastating effect on the longer-term US economy; as well as the consequent societal problems that are a corollary of worklessness.

I will be writing to IPMA-HR colleagues from the US to discuss this problem with them and I hope to be able to post their reply as a future blog item for our PPMA website.

There is a hypothesis that events in the US are mirrored approximately six months later in the UK. I hope this blog post persuades you why the Global Skills Race is so vital for the longer term prosperity and wellbeing in the UK.

Go tackle your organisational deficit now… before it’s too late.

Dean

By | 2017-07-30T12:23:36+00:00 April 19th, 2010|Categories: Dean Shoesmith|0 Comments

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