Posts Tagged ‘unemployment’
Wednesday, June 30th, 2010
Surprise, surprise! According to the Guardian, a private Treasury assessment of the planned spending cuts says that up to 1.3m jobs could be lost over the next five years. The Guardian says that it has seen a slide from the final version of a presentation for last week’s Budget, which says that: “100-120,000 public sector jobs and 120-140,000 private sector jobs assumed to be lost per annum for five years through cuts.”
This is in response to the coalition government’s decision to cut most spending department budgets by 25% after inflation over the next four years, with only health and overseas aid being protected.
The government would have us believe that the private sector will grow so strongly over the next five years that it will create 2.5m jobs. This is given the forecast that more private sector jobs are going to be lost than public ones, with a private sector reduction of up to 700,000 jobs over the next five years. If the private sector is to lose 700,000 jobs how is it going to create a further 2.5m? This is utterly ridiculous.
Public spending is being slashed. Government contracts to the private sector will be decimated. Where is the pull coming from for private sector expansion? The man in the street will have less to spend so why should firms produce more goods? They could export more – except for the fact that the rest of Europe is cutting back as well and the US may follow next year. On top of that, sterling is appreciating against the euro. Who is going to buy our goods?
As Brendan Barber, TUC general secretary said yesterday, this is “absurd”. He said: “This is not so much wishful thinking as a complete refusal to engage with reality. Much more likely are dole queues comparable to the 1980s, a new deep north-south divide and widespread poverty as the budget’s benefit cuts start to bite. Many will find that a frightening prospect.”
What reason did the government give for making such dramatic cuts? It was to reassure the markets. Are the markets reassured? No! The FTSE index has fallen 14% since April and in the last six trading days £100bn has been wiped off the value of leading companies. Analysts are saying that markets are on a “cliff edge”.
On top of this the numbers of police on our streets are to be cut on the same basis as all the other spending departments. All I can say is “thank God none of us will have anything left worth stealing.”
Tags: Budget, private sector, public sector, spending cuts, sterling, unemployment
Posted in Exchange Rates, government borrowing, government spending, sterling, unemployment | No Comments »
Thursday, June 17th, 2010
The unemployment rate for the three months to April 2010 was 7.9% which was an increase of 0.1%. There was an increase in the number unemployed of 23,000 to give a total of 2.47 million out of work. This is a bleak figure which looks set to become even bleaker. Particularly so, given the fact that there are 5.2 unemployed people per vacancy at the moment.
On the other side of the coin, the number of people claiming Jobseeker’s Allowance (also called the claimant count), actually fell by 30,900 between April and May to reach 1.48 million. This is the first time this measurement has fallen below 1.5 million since March 2009. This may be because more people are being put on training courses and some of those who are losing their jobs may not be eligible for Jobseeker’s Allowance.
Also, according to the ONS, the number of people who are economically inactive, which means that they are out of work but not seeking employment, actually increased by 29,000 during the three months to April. This means that the total of the economically inactive has now reached 8.19 million which is equivalent to 21.5% of the working population.
At the same time, there was a small increase of 5,000 in the numbers employed in the three months to April. But, the number of full-time workers fell by 56,000 over the quarter whilst the number of part-time workers increased by 61,000. The number of those working part-time because they cannot find a full-time job rose by 45,000 over the quarter, and now totals 1.08 million, which is the highest figure since comparable records began in 1992.
The employment situation is a mess and about to get worse. The government’s austerity cuts are already biting. Just yesterday, one of my friends lost her job in education, because “funding has been cut for next year” within the local authority. Of course, the more public sector workers lose their jobs the lower government spending will be on the surface. But then there are all the unemployment benefits which will have to be paid added to the loss of income tax and national insurance which the out-of-work will no longer be paying.
With growth figures being slashed, we are not going to be rescued by the private sector, especially as other governments, especially in Europe, are taking the same sort of austerity measures. If markets dwindle, employment will fall even further. I had a job application this morning from someone who has a “starred” First Class degree and is currently working as a waiter. Your guess is as good as mine as to where it is all going to end.
Tags: Employment, Public Finances, unemployment, unemployment rate
Posted in Employment, Public Finances, economic growth, government borrowing, government spending, unemployment | No Comments »
Thursday, May 27th, 2010
This is the headline figure published today by the British Retail Consortium following a study carried our by the Centre for Economics and Business Research using its model of the UK economy.
They found that an increase in VAT to 20% from its current level of 17.5% would result in the loss of 163,000 jobs over four years and a reduction in consumer spending of £3.6bn.
Such an increase in VAT would be appealing to the government as it would reduce the deficit by £11.3bn by the end of the first year at the stroke of a pen. However, the Chancellor, George Osborne, did seem to suggest this week that he was not planning to raise VAT. But, you never know.
 Will the government take the easy route of raising VAT? According to the BRC such a rise in VAT would cost 30,000 jobs in the UK in the first year alone, across all employment sectors. The initial effect of an increase in an indirect tax such as VAT, is to push the supply curve upwards and to the left. This will result in an increase in market prices and a fall in quantity demanded, depending on the elasticity of demand for the various taxed goods.
The tax will serve to reduce companies’ margins, and the incidence will be greater upon them the more elastic is the demand for the product. As margins are squeezed, costs may be cut and fewer people employed.
BRC Director General Stephen Robertson summed up by saying: “The budget deficit is serious. It has to be tackled but proposals must be judged against the implications for jobs and growth revealed by this new information.”
“Business growth will get the country out of the hole it’s in, led by retail. The government must now deliver a route to stability that supports companies and customers by avoiding damaging tax rises.”
Tags: consumer spending, Elasticity, indirect taxation, Microeconomics, tax incidence, unemployment, VAT
Posted in Employment, Public Finances, taxation, unemployment | No Comments »
Thursday, May 13th, 2010
The unemployment rate was unchanged at 8.0% in the three months to March 2010. But the number of unemployed increased by 53,000 over the quarter to reach 2.51 million. This is the highest figure since the three months to December 1994.
Figures were also published by the Office for National Statistics yesterday to show that the number of people classed as economically inactive, that is those out of work and not seeking work, has risen by 88,000 to reach 8.17 million. This is the highest total since records began in 1971 and includes students, those acting as carers for relatives and those who have simply given up seeking work. There has doubtless been an increase in the number of discouraged workers who have simply given up looking for a job in the current climate.
There are also an increasing number of people who have been unemployed for 12 months or more. This figure increased by 94,000 over the quarter to reach 757,000 which is the highest figure since the three months to May 1997. Given that the number of people out of work for up to six months actually fell by 52,000 this suggests that we have nearly three quarters of a million long-term unemployed who are finding it virtually impossible to get back into the job stream. This is probably due to a mismatch of skills compared to current demands by businesses.
Whilst the Labour Force Survey measure of unemployment shows a worsening picture, the number of people claiming Jobseeker’s Allowance, also known as the claimant count, continues to improve. This has now fallen for the last three months and for five out of the last six months, and between March and April fell by 27,100 to reach 1.52 million. These falls could be due to the active government initiatives to place the unemployed on training courses.
The employment rate for the three months to March 2010 was 72.0% which was down 0.3% on the quarter and was the lowest level since the three months to September 1996. The number of people in employment fell by 76,000 on the quarter to reach 28.83 million.
There was a fall in the number of full-time workers of 103,000 while the number of part-time workers rose by 27,000 over the quarter. The number of people who are now working part-time because they cannot get full-time work increased by 25,000 over the quarter to reach an amazing total of 1.07 million, which is the highest figure ever recorded. This shows the extent of underemployment within the economy, but also its flexibility, which has meant that the headline unemployment figure is much better than it could have been.
Comparatively, the UK’s unemployment rate of 8.0% is superior to many other nations. The OECD average for March was 8.7% whilst the EU recorded 9.6% and the euro area was 10.0%. Other significant figures show the rate in Ireland at 13.2%, Spain at 19.1% and the US at 9.7%,
Bad news in the short term is that the number of job vacancies fell by 6,000 to 475,000, which is the first quarterly fall since last autumn. In addition, public sector employment rose by 7,000 in the last quarter of 2009, whilst private sector employment fell by 61,000. So, at a time when Gordon Brown was talking about the need to curb public sector employment it was growing to 6.1 million. I’m sure the new coalition government will have something to say about that.
Tags: Employment, job vacances, long-term unemployment, underemployment, unemployment
Posted in Employment, unemployment | No Comments »
Thursday, April 22nd, 2010
The latest unemployment figures take a bit of unravelling. The headline figure for the three months to February, using the Labour Force Survey measure, was up by 43,000 over the quarter to reach 2.5m. This is the highest figure since 1994. This gave an unemployment rate of 8.0% which was up 0.1% on the previous quarter. This is bad news.
However, the number of people claiming Jobseeker’s Allowance, which is also known as the claimant count, actually fell by 32,900 between February and March 2010 to reach 1.54m. This is a bigger fall than anticipated and this measure of unemployment has now fallen for four out of the last five months. This is good news.
 Are things getting better or worse in the UK labour market? So, how then do we reconcile two figures which are moving in opposite directions. It seems that one major factor to the fall in those claiming Jobseeker’s Allowance is that a number of new training schemes have been put in place which are particularly aimed at young people, and which are at least temporarily, keeping them off benefits. Thus, they cannot be unemployed whilst they are being trained. In fact, official figures show that the number of people on government training and employment schemes has increased by 12,000 or 11.2% in the three months to February.
The question is, when the training is over will there be any jobs available? I have already blogged this week about the possibility of a jobless recovery and given the upcoming cull in the public sector it would appear that unemployment will rise further over the next year or so.
An additional factor which would back this up is the fact that there are now 1.05 million people working part-time – because they could not find a full-time job. This number increased by 13,000 over the past quarter. We therefore have a major problem of underemployment.
The significance of this is that these people are now classified as ‘employed’, and it may be as the economy picks up that they will get the first opportunity to move into full-time jobs as the companies they work for start to expand. But as they work more hours they will still just be amongst the already ‘employed’. The point being that the labour market could expand fairly quickly without reducing the unemployment figures.
So, the future changes in the labour market are going to be difficult to call. One positive note is that the number of vacancies for the three months to March 2010 was up 9,000 over the quarter to reach 475,000.
Finally, average earnings figures were also published yesterday. These show that the annual growth rate for regular pay, excluding bonuses, was 1.7% for the three months to February 2010, up from 1.5% in the three months to January. But, what continues to astound, is the difference between the private and public sectors.
When bonus payments are excluded, which mainly apply to the financial sector, growth in private sector average earnings stood at 0.9% compared to a whopping 3.9% for the public sector. Mr Brown is obviously being very generous to government servants, but the day of reckoning cannot be far off.
Tags: average earnings, Employment, private sector, public sector, underemployment, unemployment
Posted in Earnings, Employment, labour markets, unemployment | No Comments »
Wednesday, March 17th, 2010
Pascal Lamy, director-general of the World Trade Organisation recently gave a speech in Brussels at which he explained the deterioration in world trade over the past year.
He said: “These are not easy times. We know that in 2009, growth of real world GDP was negative, estimated at -2.2 per cent. Furthermore, the global unemployment rate reached its highest level ever, with the International Labour Organization estimating the number of jobless worldwide at over 200 million. The adverse impact of the recent financial crisis on the world economy in terms of output and employment is undeniable.
“World trade has also been a casualty of this crisis, contracting in volume terms by around 12 per cent in 2009 — the sharpest decline since the end of the Second World War. The main explanation for this freefall in trade has been the simultaneous reduction in aggregate demand across all major world economies. The drying up of trade finance during this period has also been a contributing factor. To a much lesser degree, trade has been adversely affected by some instances of increased tariffs and domestic subsidies, new non-tariff measures and more anti-dumping actions.
 World trade declined by about 12% last year. “We started last year with a collapse in trade, a drying up of trade finance, concerns that donors would reduce funding for “Aid for Trade”, and worries that protectionism would kick in. And yet one year on from the onset of the crisis, we see that, to this point at least, the multilateral trading system has proven its sturdiness as a bulwark against runaway protectionism.
“In most developed economies, including the EU, stimulus packages have been instrumental in preventing further deterioration in output while preparing the path to recovery. The jury is still out though on whether some of the measures introduced to stimulate economies contain provisions that favour domestic goods and services at the expense of imports.
“But the positive impact of national stimulus packages is fleeting and worries are mounting over the huge budget deficits rung up by many governments. Economies urgently need other sources of growth — sustainable engines of growth which will not add to our already seriously indebted economies. This is where trade can be an important part of the story, both in the long-run and in the short to medium-term.
“In the long-run, economic growth is driven very significantly by technological progress and the quality of domestic institutions. Trade has an important role in this context.
“First, it can enhance technological progress by increasing the incentives to innovate, facilitating transfer of technology and fostering “learning-by-doing” effects.
“Second, trade reform may directly increase the quality of institutions by leading to the adoption of certain institutional norms. Moreover, the preferences that underlie such institutional reforms may be the indirect consequence of the workings of market forces associated with trade.
“In the short-to-medium run, trade allows external demand to provide a buffer for economies facing low domestic demand during periods of recovery from the crisis. This is especially important in several developed economies, where domestic demand is likely to be subdued for a while as domestic savings are reconstituted and the financial system recovers. Trade openness vis-à-vis a diverse set of countries is important for mediating the effect of a shock.
“More generally, trade can increase income or output levels through efficiency gains from specialization based on comparative advantages, greater competition, access to a larger variety of intermediate inputs, scale economies and an intra-industry reallocation of resources.
“Moreover, exports, in particular, can increase the levels and growth rates of income or output as they often have a high value-added component. This is especially true in developed countries, where firms specialise in the high value-added segment of the global supply chain. Importantly, the value-added component of exports is likely to have a positive effect on domestic demand due to backward linkages with several sectors in the economy.
“In fact, evidence suggests that the domestic content of value added by exports is higher as countries develop. For example, in 2008, 80 per cent of the value of the goods exported by the US had a domestic content, while this share was only 42 per cent for Malaysia. In addition to the value-added argument, there is evidence of “learning-by-exporting”, which increases productivity and hence promotes growth.”
To read the full speech click here
Tags: GDP, International Trade, Protectionism, unemployment, World Trade Organisation
Posted in GDP, International Trade, Protectionism, World Trade, World Trade Organisation, economic growth, unemployment | No Comments »
Thursday, March 4th, 2010
A very highly rated measure of service activity is The Chartered Institute of Purchasing and Supply/Markit Index. This purchasing managers index rose to 58.4 in February from 54.5 in the previous month and any figure over 50 reflects growth in the sector. This was the highest level the index has reached since January 2007 and was above the level which commentators were forecasting.
This is particularly good news as services account for around 70% of activity in the UK economy. David Noble, the chief executive of the CIPS, said that: “After the snow-related blip at the start of the year, the services sector is pretty much firing on all cylinders now.”
Unfortunately, this is not pushing through into employment, as the survey notes that jobs in the sector fell for the 22nd month running. But, according to Mr Noble: “…the rate of decline was only modest…Job losses were largely the result of natural wastage and the non-replacement of leavers.”
Those parts of the service sector which recorded the biggest gains in February were the transport, storage and communications industries.
These figures reassured the markets and put a halt to the decline in the value of the pound which has been seen over the past few days, with sterling closing last night at above the $1.50 level.
Tags: Service Sector, unemployment
Posted in Service Sector, unemployment | No Comments »
Thursday, February 18th, 2010
In the three months to December, unemployment fell by 3,000 on the previous three months, to total 2.46 million. This gave an unchanged unemployment rate of 7.8%. There was also good news on the vacancies front, as these rose by 49,000 to 479,000. At the same time redundancies fell in the final quarter of 2009 by 36,000 on the previous quarter to total 168,000.
However, Yvette Cooper, the secretary of state for Work and Pensions said: “…we know things are going to be tough for a while and we expect further increases in unemployment before the summer.”
In fact, there was a surprising increase in the claimant count unemployment figures with the number claiming Jobseeker’s Allowance rising by 23,500 to 1.64 million in January 2010. Many commentators had anticipated a fall of about 10,000 in this figure rather than what turned out to be the biggest increase since July 2009. The treacherous weather in January may have had some impact on this total.
However, there are a number of unwelcome trends underlying the overall figures. For example, more people are taking on part-time or temporary work rather than applying for unemployment benefit – assuming they are eligible to receive it. According to the ONS the number of people in full-time employment fell by 37,000 on the quarter to reach 21.22 million, the smallest quarterly fall since the three months to July 2008. The number of people in part-time employment increased by 25,000 on the quarter to reach 7.67 million. There were 1.04 million employees and self-employed people working part-time because they could not find a full-time job. This is the highest figure since records for this series began in 1992 and it is up 37,000 on the quarter.
 Nearly 1 million young people under the age of 25 are unemployed in the UK. On top of this there is a great deal of ‘underemployment’ in the economy. In fact, the ONS estimates that there are 2.8 million people working fewer hours than they would wish to. So, although there is much less unemployment than we might have expected at this stage of the recession – some commentators had expected to see total unemployment reach 3.0 million when the recession began – the overall figures do mask an underlying problem with millions of workers on temporary contracts, taking on part time jobs and working fewer hours than they would have chosen.
In addition, the number of those out of work for more than a year, the definition of long-term unemployment, continues to rise. This figure was up 37,000 on the last quarter to total 663,000 which is the highest figure since 1997. Of even greater concern is the fact that nearly 1 million young people are out of work. This includes 198,000 16-17 year olds, and 725,000 18-24 year olds. Worse still is the fact that 190,000 young people have been out of work for a year or more. In fact, many have never started work, either since leaving school or university, and anecdotal evidence suggests that there are even more unregistered unemployed youngsters who are thinking of going back into the education process or have given up altogether.
As Yvette Cooper was quoted above, we know that the worst is not over yet. Almost without doubt, there will be further cuts after the election as public sector and private sector belts have to be tightened further. A lot of jobs are likely to be lost directly in the public sector and subsequent multiplier falls in demand could well impact the private sector as well. This means that a double-dip recession could still be on the cards.
Tags: part-time work, recession, redundancies, underemployment, unemployment, vacancies, youth unemployment
Posted in labour markets, unemployment | No Comments »
Monday, February 15th, 2010
It looks as though jobs are going to be lost from the public sector faster than they are going to grow in the private sector. So says the latest Labour Market Survey produced by the Chartered Institute of Personnel and Development (CIPD) together with KPMG.
In a survey of over 700 employers it appears that those employers who plan to make redundancies expect to cut their workforce by 6.2% on average this quarter, compared with 3.8% in the previous quarter. This is against a background of an overall fall in unemployment in the three months to November, with unemployment currently standing at 2.46 million or 7.8% of the workforce.
The net balance of employers in the private sector between those expecting to recruit and those expecting to cut staff is currently negative at -5%. On the other hand, things are much bleaker in the public sector. Here the net balance was -31%, with the public administration and defence sector recording a figure of -62%.
 It looks like workers in the public sector will be bearing the brunt of job losses in the months ahead. According to John Philpott, Chief Economic Adviser at the CIPD: “The UK jobs market is still on the ropes, with a public sector fall in employment now a reality as it feels the impact of the longest recession in modern times.
“Unfortunately, there are more punishing rounds ahead. The private sector will be dealing with ongoing concerns about productivity, wage costs and inflation alongside the spectre of deep public spending cuts. With many private sector companies looking to move jobs abroad in an attempt to find the right balance between skills, quality and cost reduction, the jobs market needs all the continued support and protection it is getting from the government.”
In fact, the Survey shows that outsourcing of jobs is a growing concern. Ten per cent of private sector companies plan to outsource jobs abroad in 2010. Of these, over 50% plan to relocate UK jobs to India, while 37% plan to move jobs to Eastern Europe.
One positive point for inflation and input costs is that pay prospects are extremely subdued. In recent times public sector pay has been rising faster than that in the private sector, but currently the private sector is predicting a rise of 2% compared with 0.9% for the public sector at the next pay award.
Tags: Earnings, private sector, public sector, unemployment
Posted in Earnings, unemployment | No Comments »
Monday, February 8th, 2010
Latest figures from Paris this morning show that the OECD unemployment rate stabilised at 8.8% in December 2009. This was unchanged from the previous month but was up by 1.8 percentage points from the same month a year earlier.
Given that unemployment is a lagging indicator, and normally continues rising after a recession has come to an end, it is good to see that stability is fairly widespread at the moment.
In fact, the latest figures for January 2010 show that unemployment has fallen in both Canada and the US. In the US, the unemployment rate declined to 9.7% from a rate of 10.0% in December 2009, and in Canada the rate fell by 0.1 percentage point to 8.3% in January.
 Time to get those job applications in the post.
Of course, the UK is also showing very promising signs of a recovery in unemployment even though we only officially came out of recession in the final quarter of last year, and that with a growth rate of only 0.1%. Although, the latest figures show that UK unemployment was stable at 7.8%, there were absolute falls in the numbers unemployed in both the Labour Force Survey and the claimant count measures of unemployment.
In other major economies, the unemployment rate was unchanged in France at 10.0% and Germany also saw no change with a rate of 7.5%. However, in the euro area as a whole, unemployment actually rose by 0.1 percentage points to 10.0% in December 2009. Given the problems with Greece and its budget deficit, plus similar problems in Ireland, Spain and Portugal it may be some while before the recovery evens out across the euro area.
Tags: euro area, growth, OECD, unemployment
Posted in OECD, eurozone, unemployment | No Comments »
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