Ways in Which the UK Government Policies Impact Upon the Social Essay

Ways in Which the UK Government Policies Impact Upon the Social Benefit System - Essay Example This essay stresses that varied researchers have attempted to offer an analytical framework, which is designed with an aim of improving understanding of the relationships between varied measures of government policy impacts upon social benefits system. This is vital because this will help the government to embed social impacts into government decision making process and also construe the policy implications on the comprehensive measures of wellbeing. There are numerous ways of valuing varied social benefits but understanding the role of different governmental polices in an economy is vital. The UK government intervenes in the labor market for varied reasons such as correcting market failure, achieving equitable income and wealth distribution, as well as, improving the performance of the economy. There are varied ways through which the government can intervene in the market and this is through fiscal or monetary policy intervention, labor market policy intervention, competition policy intervention and employing varied regulation or policies. As the paper the government policies have also affected the supply side especially the changes in the political context, economic restructuring, national and international economic conditions and changes in job skill requirement. The changes in skill requirements result due to development and diffusion of new technology; thus impacting the supply for labor. The labor market policies are often perceived not only as a demanding phenomenon but also as an exclusively supply side phenomenon. However, the orthodox macroeconomic policy as practiced by the central banks in the European markets and IMF requires the monetary policies, which is setting of interest rates to run in accordance with an inflation target in the labor market. The current global economic crisis has significantly challenged this view because when interest rates hits the zero lower bound, monetary policy becomes ineffective; hence impacting social benefits in the labor market. Some progressive commentators now argue that the monetary or fiscal policies are partially to blame for average unemployment level in many countries. This is because some policies set by central banks do not take employment levels into account when setting interest rates because they only target inflation; thus impacting social benefit system. In addition, the orthodox macroeconomic theories presume that in case unemployment exists in the market equilibrium; this must be due to the increased or too high real wages (Gillespie, 2013, p. 73). However, from the Keynesian theory, sometimes it may be possible for unemployment to exist in case wages are too low. This is because of insufficient aggregate demand in an economy of which wages are the