Simon Read: Time to celebrate? Not for the low-paid

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The Independent Online

The fact that the Footsie topped 5,000 this week for the first time for almost a year prompted much positive debate in the investment industry. Apart from some warnings of the possibility of a double-dip leading to a second crash, the mood was celebratory. With stock markets climbing 40 per cent since the lows of March, it is understandable that fund managers are using the figures to suggest it is time for investors to pile back into the market. I am still a little wary, but it does seem certainly a good time to review investment decisions and plans.

One question prompted by the Footsie's partial return to health, however, is whether it is a signal that the credit crunch and the recession is over. It's certainly not for the country's millions of low-paid workers. According to sobering stats published by the TUC this week the situation as gloomy as ever, with job prospects still grim and the recession appearing far from over.

The number of shop workers claiming jobseeker's allowance, for instance, has increased by 76,230 in the past year. The TUC's research shows that the risk of experiencing unemployment is higher for workers in lower-paid jobs, such as junior admin assistants or those working in factories or warehouses. TUC general secretary Brendan Barber said: "These figures explode the myth that this is some kind of classless, or even middle-class, recession. The Government must do all it can to tackle joblessness and the permanent scar of long-term unemployment."

Richard Moore, a fund manager who looks after Santander's UK Growth Fund, says the recovery is in the hands of the consumer. "Everything will depend upon the consumer. Central banks have provided the liquidity, but it is up to the consumer to spend rather than save and there is little sign of this happening yet." He may be perfectly right about that but, to my mind, that's no reason to loosen the belt and start splurging once more.

Indeed, for the estimated 7.5 million low-paid workers in the country, there's not yet an opportunity to start spending again. Even if they've kept their job in the recession, they're still struggling with rent or mortgage payments and are still running scared of being thrown out of work.

Sophia Parker, the director of research and policy at think tank Resolution Foundation, warns that low earners losing their jobs are in danger of becoming permanently unemployed because of the difficulty they have in bouncing back. Not least because they are extremely unlikely to have any fall-back cash to help them through difficult times.

Those that do own their own homes tend to be closer to falling into negative equity, which means millions are still living on the brink of financial disaster. Until they get back on their feet the recovery for the whole country will yet be some distance off. For that reason, I'm not celebrating the Footsie's rise this week.

Instead I'll be looking towards next Wednesday's labour market figures. If the rise in the number of jobless folk is less than previous months, that will be the time to celebrate.

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