Supply side Economics in the UK

c) Evidence of governments who have used supply-side measures to reduce unemployment and a discussion of what effects those measures have had

The UK has used various supply side policies to try and reduce unemployment. For a general overview on supply side policies in the UK

The policies particularly useful for reducing unemployment include:

• Benefits index linked. Unemployment benefits have increased slower than wages making benefits less attractive.
• Reduced power of trades unions. T.unions in the UK are less powerful than in 70s and 80s. This is partly due to Thatcher reforms, but also long term structural change reducing power of unions. Arguably this reduces real wage unemployment.

• However, interesting that the increase in the national minimum wage has not caused any real wage unemployment
• The new deal - a combination of better information and training for the unemployed. Also workers have to accept job if offered after 6 months.
• More flexible labour markets. Although the UK’s record on this is a bit mixed.

Evaluation

• difficult to know whether fall in unemployment is due to supply side policies or long period of economic growth.
• Government statistics suggest unemployment is lower than it actually is
• More flexible labour markets have created more temporary and short term employment.

See also:

• Impact of supply side policies in improving UK Economy
• The economic importance of supply side policies