Two million children grow up in homes without a working adult, while 1.4m people have received out-of-work benefits for nine of the last 10 years, the CBI has found.
“The boom years before the recession masked the extend of deep-rooted problems,” said CBI director-general Jon Cridland, “including long-term unemployment and an unhealthy dependency on the public sector”.
In some areas a surge in employment from 2004-07 was swiftly eradicated as the recession struck in 2008-09, the CBI’s report said.
“This suggests that, in many cases, growth in employment prior to the recession was driven by a cyclical economic boom, rather than reflecting a sustainable structural improvement.”
Previously industrial urban areas particularly suffer from entrenched unemployment, except where service and high-tech jobs have pared losses from industrial decline.
“In London pockets of high unemployment are mostly concentrated in the east of the city,” the report says, listing post-industrial urban areas in Tyneside, Hull, Liverpool and south Wales as having notably imbedded unemployment.
“Future trends in the job market risk exacerbating current divisions,” the report says, “with more higher skill jobs in London and the south east, and a concentration of low skill jobs in the north east and the west midlands.”
It is not sufficient for people to move to prosperous areas, the CBI will argue, calling on the government to attack the “jobs deficit” throughout the UK.
Recommendations from the CBI will be published in the autumn, the group said.
“People may be sufficiently discouraged by the state of the labour market, or their own poor prospects of finding a job, or perversely incentivised by the welfare system so they give up the search for work altogether,” the report says.
The recession had an uneven effect across the country, the report finds, provoking an eye-watering 77 per cent hike in Northern Ireland’s unemployment. At the other end of the scale, unemployment in the East Midlands rose by a more modest 25 per cent.
“These problems will not disappear with the economic recovery and left unchecked will have grave social and economic consequences,” Cridland said.
“Only private sector growth can create the jobs we need and we must ensure the fruits of recovery are felt in every region,” he added.