Leading article: The worst could be yet to come

Share
Related Topics

Beware the incomplete picture. The latest official figures from the Office for National Statistics show that unemployment fell to 2.47 million in the three months to May and the numbers in work rose by 160,000. We need to be mindful of what these headline statistics hide. The three months saw a rise of 148,000 in the number of people in part-time employment. The numbers in full-time jobs fell by 22,000. Some 27 per cent of workers are now in part-time jobs, the highest proportion since records began in 1992. And more people are not working short hours because they wanted to improve their work-life balance, but because this is all the employment they can get.

There are other malign patterns below the surface. The number of people in long-term unemployment (more than a year) has now breached three-quarters of a million. And youth unemployment is still devastatingly high: 707,000 18- to 24-year-olds are out of work. While this recession has been relatively mild for many, the social pain for those unfortunate enough to lack job security should not be underestimated.

But it is important to recognise, too, that the employment situation could have been worse. Even part-time work is better than no job at all. One of the main reasons unemployment has not hit the highs of previous recessions is that firms have taken a more enlightened approach in this downturn. Employers have made considerable efforts to retain workers though the hard times.

This has been helped by the decline in unionisation. In the past, it would probably have been impossible for employers and workers to reach the sort of compromises on short-working and wages that we have seen in recent years. Average pay rose by just 1.8 per cent year-on-year in May. That wage restraint might be painful for workers, especially as inflation remains stubbornly high, but it is helping to keep people in jobs.

It is instructive to compare Britain to the Eurozone, where labour markets are less flexible. Unemployment there has hit 10 per cent, compared with 7.8 per cent in Britain. And the British problems of youth unemployment and casual work are still more acute across the Channel.

Yet the outlook for UK unemployment is, nevertheless, grim. Large public sector redundancies are expected as the Government sets about cutting departmental budgets by between 25 and 40 per cent by the end of the Parliament. The Office for Budget responsibility has estimated that this fiscal squeeze is going to cost around 490,000 public sector jobs.

Public sector employers and unions should learn from the experience of the private sector in managing reduced budgets. Flexible working, reduced hours and, of course, wage restraint will help cushion the blow. But realism is necessary. A significant rise in jobless is still inevitable, even if the Government and the public service unions work together in complete harmony in the coming months and years.

And the hoarding of labour by firms in the recession could crimp job creation in the recovery. As orders return, firms will not need to hire to meet demand. So what was benign on the way down could prove malign on the way up. Economists are already fretting about a "jobless recovery".

What makes the situation still more ominous is that the Government has taken a gamble on heroic levels of job creation by the private sector over the coming years. The OBR has forecast that more private sector jobs will be created in the coming years, as confidence returns, than were created in the boom years of the past decade. The cuts to public spending will be unprecedented. But so too, we are told, will be the private sector recovery. We need to hope that this optimistic forecast is correct because otherwise Britain's unemployment nightmare could be only beginning.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Office Administrator

£14000 - £18000 per annum: Recruitment Genius: An Office Administrator is requ...

Recruitment Genius: Sales Executive - Commercial Vehicles - OTE £40,000

£12000 - £40000 per annum: Recruitment Genius: Due to expansion and growth of ...

Ashdown Group: Senior PHP Developer - Sheffield - £50,000

£40000 - £50000 per annum: Ashdown Group: Senior PHP Developer position with a...

Recruitment Genius: Operations Leader - Plasma Processing

Negotiable: Recruitment Genius: An Operations Leader is required to join a lea...

Day In a Page

Read Next
 

i Editor's Letter: Most powerful woman in British politics

Oliver Duff Oliver Duff
All the major parties are under pressure from sceptical voters to spell out their tax and spending plans  

Yet again, the economy is the battleground on which the election will be fought

Patrick Diamond
Revealed: Why Mohammed Emwazi chose the 'safe option' of fighting for Isis, rather than following his friends to al-Shabaab in Somalia

Why Mohammed Emwazi chose Isis

His friends were betrayed and killed by al-Shabaab
'The solution can never be to impassively watch on while desperate people drown'
An open letter to David Cameron: Building fortress Europe has had deadly results

Open letter to David Cameron

Building the walls of fortress Europe has had deadly results
Tory candidates' tweets not as 'spontaneous' as they seem - you don't say!

You don't say!

Tory candidates' election tweets not as 'spontaneous' as they appear
Mubi: Netflix for people who want to stop just watching trash

So what is Mubi?

Netflix for people who want to stop just watching trash all the time
The impossible job: how to follow Kevin Spacey?

The hardest job in theatre?

How to follow Kevin Spacey
Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

Armenian genocide and the 'good Turks'

To continue to deny the truth of this mass human cruelty is close to a criminal lie
Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

'Lou needed care, but what he got was ECT'

The truth about the singer's upbringing beyond
Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

This human tragedy has been brewing for years

EU states can't say they were not warned
Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

Women's sportswear

From tackling a marathon to a jog in the park, the right kit can help
Hillary Clinton's outfits will be as important as her policies in her presidential bid

Clinton's clothes

Like it or not, her outfits will be as important as her policies
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders