Will this be a jobless recovery?

6 10 2009

 

AUAFSC9CA3B1FKFCA8XU5EPCA777ZTDCAR59Y2VCASIJMODCALGU5QUCAMXXSGBCAB6JSZRCA8KMPKXCARPYO9JCA653CVZCA0PX1P5CAW6HNUCCAVKPXI4CA0ILQW3CA370OV9CA9IHIE3CA7MSGYCCAVC85EWBetween 1999 and 2007 manufacturing jobs in the UK fell from 4.5m to 3.3m. In the same period jobs in the financial and business services sector grew from 5.3m to 6.5 m, and jobs in the public sector grew from 8.4m to 9.9 m. The Financial Times claims that around two thirds of jobs created since 1998 have been in the public sector. Most strikingly, within that figure, of the 1.07 m jobs created in the public sector,963,000 were taken by women in health, education, social care and social administration. There are at least 10 areas of the UK, all outside London, where 40% or more of those working are in the public sector. 1

There is good reason to fear that whatever the eventual shape of the UK recovery it will not bring with it many new jobs. As a result we may have to live with a much higher level of structural unemployment than has been the case for the past ten years. The two main areas of job growth in the UK in the past ten years were across the public sector, particularly in welfare and education, and in financial and business services. None of these sectors is likely to play the same role in the next ten years, if for different reasons.

The public sector now looks as if it will be, if not necessarily cut back as severely as the bloodthirsty rhetoric might suggest, then at least contained. Financial and business services may stabilise but are unlikely to regain the dynamic growth of the boom years.

Neither is the long term decline in manufacturing jobs likely to be reversed. The UK’s role in manufacturing is predominantly in areas of high productivity with high skill levels. Even with more investment and more support and encouragement from government, which would be very welcome,  manufacturing is unlikely to add a huge amount of new jobs.

Both the Tories and Labour are proposing ways of trying to reduce unemployment, but these are mainly on the supply side, through for example attempts to get people off of sickness benefit. Forcing people back to work only makes sense if jobs are available for them to do, and at decent wages. The main effect otherwise is the traditional role of the unemployed as the reserve army of labour which helps to force down the wages of those in work.

The proposed extension of the retirement age to 66, although welcome for other reasons, will also have the effect in the medium term of adding to the ranks of the unemployed, particularly the young.

Unemployment is now nearing 8% of the adult population of working age. It is estimated that it will reach at least 3 million by next year. With benefits also likely to be squeezed this means misery for millions. This is the reality of the austerity plans both parties have in store for us.  Far more discussion is needed  about what kind of economy the UK could have which could gainfully employ the unemployed.

 

 

 

 

 

 

1 https://postrecession.files.wordpress.com/2009/01/whitepaper6.pdf

 

 

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One response

6 10 2009
Johny Morris

Noticed that manufacturing output fell again in August, this despite a low pound being even further depressed by an orchestrated campaign that includes the Bank of England. Germany and France (if the figures are accurate) are already emerging from the recession, Germany especially being an export led recovery.

If all the traditional things are in place – low exchange rate, low interest rates, high unemployment depressing wages – why is manufacturing in this country still struggling? Is there some structural problem(s) that I’m not aware of? Lack of export credit maybe? Over concentration in markets that are yet to recover? What is limiting growth? Has manufacturing shrunk to below the critical mass needed to recover?

Of course, harsh as it is, unemployment is always a lagging indicator so I suppose we all expect that to carry on rising ito the midle of next year. I’m expecting the shop window policies of the Torries with regard to incapacity benefit to be watered down on implementation when the realisation dawns of what it will do the headline unemployment figure.

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