Editorial: A jobless recovery? It can’t be ruled out yet

Job creation in Britain is not keeping pace with the number of would-be workers

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The consensus, until now, has been that employment in Britain has held up remarkably well, given the length and depth of the recession.

Indeed, there has been much puzzlement as to why unemployment is not considerably worse than it is. In past recessions jobs have been among the first areas to suffer, but also among the first indicators that growth is returning. The paradox of relatively low unemployment through a downturn has complicated the Opposition’s task in trying to take issue with the Government.

A new study by a London think-tank, however, suggests that the relatively rosy picture is deceptive. The left-leaning Resolution Foundation looked not just at job numbers and the unemployment rate per se, but at the proportion of the available adult population in work. And it found a “gap” of more than 900,000 jobs between the actual number and the number that would be required to restore employment to its level in 2008. Its still more pessimistic finding is that the prospects for significant improvement in the short term are remote. In essence, it maintains, hopes of something like full employment returning very soon, or even before the 2020s, are unrealistic.

The Resolution Foundation is adding its voice to those who have argued that the jobs lost over the past five years or so may never return. The result, in a country with Britain’s level of population growth, is that the current level of unemployment may be as good as it gets. Job creation is not keeping pace with the number of would-be workers. The ageing  workforce only exacerbates the problem. Youth unemployment, it seems, will remain as intractable as it is today. 

There were, of course, already reasons to be sceptical about official employment figures, or at least about what lies behind them. It is known, for instance, that many more people are working part-time or reduced hours than  want to. The much-vaunted flexibility of the workforce may have saved jobs, but it is not always voluntary. Pay rises in very many sectors have fallen well below inflation, with many workers reluctantly  accepting that having a job is, on balance,  better than not having one.

The rapidly growing practice of so-called zero-hours contracts, which treat people as employed, even if they are essentially on permanent call for no pay, also complicates the picture. Governments in the past may have disguised rising unemployment by encouraging early retirement and applying generous definitions of invalidity, but zero-hours contracts are little more than a form of words that tips the advantage far too far towards the employer. If being employed is to mean anything, such contracts must at very least provide a basic retainer. 

Whatever the deficiencies of current measurements, however, the risk would appear to be that the present paradox – an economic downturn without an equivalent loss of jobs – could be matched by an economic upturn without the increase in jobs that would be expected to go with it. And if this is the future, ministers have some thinking to do beyond the standard calls for more apprenticeships, better training, and incentives to encourage more long-term unemployed people into work.

The Government is at the start of one of the most fundamental reforms of state benefits since the introduction of the welfare state. It is a reform that is predicated on the promise that everyone will be better off in a job than on benefits. Unless there are jobs for them, however, that promise will start to ring very hollow. This is why the jobs figures are no longer just about jobs; they will have a direct impact on the rest of the Government’s programme, too.

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