UK's Brown Moves to Stem Unemployment

British Prime Minister Gordon Brown pledged to stop rising unemployment caused by the financial crisis from becoming a long-term problem ahead of a special jobs summit with industry leaders on Monday.

Sharon Lorimer

With the economy sliding towards recession, Brown said he would announce plans this week to help people who have been unemployed for more than six months.

The government is to give companies up to 2,500 pounds for new recruits who have been unemployed for more than six months, according to a report in the Guardian newspaper.

Work and Pensions Secretary James Purnell said the government would spend an extra 500 million pounds ($760 million).

Unemployment in Britain rose to 1.864 million people in the three months to October, equivalent to six percent of the workforce and the highest rate since the three months to June 1999, according to the Office of National Statistics.

Retailer Marks & Spencer and carmaker Nissan Motor last week said they were axing 2,430 jobs between them.

"We must do everything we can to help those losing their jobs to find work again quickly or to get a new skill," Brown will say, according to remarks released by his office. "In other words, we cannot always prevent people losing the last job but we can help people get the next job."

"Because we are determined to prevent short-term unemployment leading to long-term unemployment with all its consequences ... we are today setting out a new guarantee of intensive support for anyone still unemployed after six months."

A deep recession would severely harm any chance Brown has of winning the next general election, which he must call by mid-2010. His ruling Labour Party trails the opposition Conservatives in opinion polls.

Business leaders called for more measures to unfreeze credit to help tackle the unemployment issue.

The Confederation of British Industry (CBI), which will attend the summit, said it was looking for measures to get cash flowing to business again.

"If you want jobs, you need companies that can pay wages. That is why we need measures from government to tackle the credit crunch, and get finance flowing through the economy again," John Cridland, deputy director-general of the industry grouping, said in a statement.

"If we do not get credit moving again, good companies will fail, causing unemployment and lasting damage to the economy."

The British Retail Consortium, which is also attending the summit, said it wants Brown to do more for its members, citing the example of Woolworths, which went into administration with the loss of 27,000 jobs.

"What we really want is for the prime minister and the chancellor (of the exchequer, Alistair Darling) to acknowledge that lots of retailers are suffering right now, with falling sales and rising costs and margins being crushed," a spokesman told Reuters.

It called on the government to freeze new business rates, and to reinstate tax relief for empty property, according to a report in the Independent newspaper.

The Federation of Small Businesses launched a five-point plan it said could create 400,000 new jobs.

It said more should be done to promote part-time working, investment in apprenticeships, simplifying legislation, giving small businesses more opportunities to bid for public contracts and cuts in payroll taxes, as a way of creating new employment.

Brendan Barber, general secretary of the Trades Union Congress, called on Brown to move on a number of fronts, including job creation programs, better redundancy payout terms and support, and improved access to training.

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