Gulliver's travails

programme aimed at radically reducing unemployment in this country is now well under way. The New Deal - targeted initially at young unemployed people aged 18-24 - is probably the most ambitious attempt by any government for decades to address structural unemployment head on. It will be expensive. It is estimated that an additional #300m, part of the proceeds from the windfall tax on privatised utilities, will be invested in Scotland.

It will no doubt encounter difficulties. And yet, provided the economy does not suddenly lurch into recession, it really does look as though the chances of success for the new policy are good. Some commentators even argue that it may well presage the return of full employment, the holy grail, whatever that might mean in the 21st century. Even so, discussion of full employment is back on the agenda and those who call for it are no longer regarded as economic flat-earthers.

The launch of New Deal probably marks the beginning of a ''back-to-basics'' strategy of a different hue, where the promotion of work is regarded as a first-order objective and where, perhaps, full employment is an idea whose time has come again.

Glasgow is likely to be the litmus test of this ambitious assault on unemployment. No dubiety, if you can crack it in Glasgow then, for all practical purposes, you've cracked it for Scotland. This is true for several reasons.

First, a high proportion of Scotland's unemployed actually live within the city.

Significantly, about 20% of Scotland's entire unemployed and almost one-third of Scotland's long-term unemployed live in Glasgow. So, despite the total number of jobs in Glasgow increasing in recent years for the first time in almost two decades, and at a rate double that for Scotland as a whole, the city could still be described as carrying the unemployment burden of the country. What has been happening is that the increase in the stock of jobs is being taken, in large part, by people from outside.

Secondly, these official unemployment figures hide an extremely low economic activity rate. In other words there is a relatively low proportion of people of working age who are in work or registered as seeking work.

This tends to suggest that many people have simply given up through, for example, early retirement, registering as long-term sick or otherwise dropping off the official count.

Thirdly, Glasgow is now an Employment Zone - one of only five in the UK and the only one in Scotland, a tribute to the close working partnership involving the public, private and voluntary sectors which has been forged within the city.

So, as the drive for jobs goes on, Glasgow is inevitably cast centre-stage. It has the highest incidence of the client group in Scotland, it has contracts for the delivery of New Deal and, uniquely, Employment Zone, in place, there is some new money on the table - always a help - and, above all, there is a strong and experienced operational partnership committed to making a real difference.

There is no doubt the combination of New Deal, Employment Zone and a relatively buoyant local labour market should give Glasgow an edge in mounting a sustained attack on long-term unemployment.

So, what's going to happen in Glasgow? The immediate priority is to have in place all the New Deal options. We have estimated that New Deal will affect about 4000 young unemployed people in Glasgow in the first year. They will have a choice of four options - all of which include education and training towards an accredited qualification.

Added to that, Employment Zone status will allow Glasgow to experiment and develop new approaches to help people aged 25 and over who have been unemployed for one year or more to move out of unemployment.

Glasgow has about 9000 people in this category and the proposal is to offer Employment Zone places to 2500 people over a two-year period with at least half going into jobs within three months of leaving the programme.

There are several elements of the Glasgow approach to the EZ which make it distinctive and, hopefully, more impactful. The Individual Learning Account will emphasise the importance of developing learning skills. The experience from Glasgow Works is that this element is vital in rebuilding confidence, opening up new opportunities for individuals and encouraging a learning culture.

The EZ will target the hardest to reach groups. Among these are workless households, where the benefit trap has made it difficult for one adult to take a job while the other is still unemployed.

This is a difficult issue, but Glasgow's commitment to tackle it is

a demonstration of the city's

innovative approach to labour market challenges.

The neighbourhood match element of the EZ will bring real benefits through projects providing value for long-term unemployed people and new services for hard-pressed communities.

Examples include the One Plus after-school childcare projects in Easterhouse and Glasgow North or the City Centre Representatives, a Glasgow Works initiative meeting the needs of visitors to the city. Nothing better demonstrates the contribution which long-term unemployed people are capable of making to their communities given the chance.

But will all this actually help realise full employment for the city? Not surprisingly this is not an easy one to answer, not least because there is no general agreement as to what really constitutes full employment these days.

The most widely regarded definition, known as NAIRU - the non-accelerating inflation rate of unemployment - says that full employment may be regarded as the lowest rate of unemployment compatible with low inflation in the long term, and before skills shortages and high wage claims appear. This, however, is not

helpful for a commonsense understanding. And it is certainly not Beveridgean in its simplicity.

So what might we consider to be a full employment situation

in Glasgow?

Let's start by assuming that full employment exists where everyone who wants to work at the going-wage rate has a job. Subtract from that a proportion, say 3%, of the workforce in between jobs, suffering seasonal unemployment or undergoing a period of re-training (so-called frictional unemployment). Then allow for a further 2 or 3% because of what might be described as the distinctive features of the ''big-city'' labour market - particular difficulties of literacy and numeracy, remedial issues, homelessness and drug abuse.

That would give an unemployment rate in the region of 6 or 7% which, for all practical reasons, could be regarded effectively as a full employment situation.

This, as it happens, is not

much different from the latest 7.4% rate given by the Government for the Scottish unemployment rate. To achieve this level in Glasgow would indeed be an excellent performance.

The main drive of New Deal is to get people into jobs - and that has to be the focus. However, it is also seeking to achieve something called ''full employability'' - meaning that every person should remain in touch with the labour market and have saleable skills.

Perhaps, after all, this may be a more appropriate definition of full employment for the times we live in. By aspiring towards ''full employability'', as the economy expands and generates new jobs, the support systems available under New Deal and Employment Zone will allow the unemployed, particularly long-term unemployed, to benefit from them. This should help reduce the underlying rate of unemployment by directly attacking the heavy drag of long-term unemployment.

These are exciting times in the economic development business.

In Glasgow, all the organisations, public and private, which have been party to the preparations for New Deal and Employment Zone are, as they say these days, ''up for it'' and ready to give it their very best shot.

The problems of long-term unemployment which have dogged the city economy for so long will not disappear overnight. There are no miracles. But we have an outstanding opportunity to make a lasting and sustained improvement to the performance of the Glasgow economy. We must make sure we take it.