OECD backs Britain on jobs

The British approach to tackling unemployment was endorsed yesterday by economists at a meeting of the Organisation for Economic Co-operation and Development in Paris.

In a report on countries' progress on the jobs front, the think-tank, noted for its free market views, singled out the UK and New Zealand as the two with the fewest causes for concern in their jobs policies.

The report also noted that the British government was less concerned than other members about the growing inequality of income and numbers.

But Angela Knight, economic secretary to the Treasury, defended the Government's policies. "A low-paid job is better than no job," she said. "Unemployment is a much more significant cause of poverty in our countries than low wages."

The report says that cutting long-term unemployment, which accounts for more than a third of the UK total, to more acceptable levels will require extra spending. It suggests introducing limited wage subsidies for people who have been out of work for more than a year.

The UK's emphasis on supporting the unemployed in their job search activities is praised but the report concludes that the benefits of training schemes have been insignificant.

However, its recommendations for other countries are likely to prove more controversial. Although Continental European governments have come to accept the OECD's diagnosis that big structural reform of the labour market is essential, many are unwilling to trade off less fairness for more flexibility. The Scandinavian countries and the Netherlands, in particular, argue that the analysis in the new report pushes wage and job flexibility too far.

Public sector strikes in France last winter and in Germany make it easy to understand why there is a reluctance to undertake radical structural reforms when economic growth has slowed.

In a separate development, Russia sprang a surprise application to join the Western club of ministers from the OECD. Although the application was formally welcomed, some OECD officials expressed scepticism, interpreting the timing of the request as a piece of electioneering by President Boris Yeltsin.