Recession report #5: rocketing unemployment and few signs of relief
Today we have published our fifth Recession Report. It sets out our analysis of the most recent labour market statistics, which show that at the end of January this year 2.03 million people in the UK were unemployed by the ILO definition (0.8 million women and 1.2 million men). In the second part of the report we consider green jobs and the recession, recognising the importance of moving to a low-carbon economy both as a means to meet our climate change targets and to help restart economic growth and create jobs.
Our labour market analysis shows there are strong signs that worse is still to come for the economy. The claimant count jumped by 138,400 between Jan 09 – Feb 09, an increase of 11 per cent. Experts are predicting that GDP will shrink by 3.2 per cent this year (an average of independent forecasts which is being revised down monthly), and ONS have described recent contractions in the service sector as ‘unprecedented’, also noting that the last time manufacturing contracted as such high rates was the height of the 1980s recession.
The slightly better news is that, as Adam has highlighted, actual wage growth has only fallen by 0.2 percentage points on the year, and as yet levels of economic inactivity have not shown large increases. From Nov 08 – Jan 09 the employment rate actually increased by 2,000 – but the headline figure is a little deceptive, masking a fall of 48,000 in full-time posts and an increase of 50,000 in part-time jobs (and in the proportions of part-time workers who say they want full-time work).
We also consider the regional picture. Our analysis shows that in many cases regions with high levels of unemployment before the recession have experienced the largest increases since it started – for example unemplyoment in the North East was 7.2 per cent before the downturn and has since seen a 1.4 percentage point increase in job losses. But this isn’t univerally the case, with some of the largest gains in unemployment occuring in regions where unemployment levels were previously below average – for example over May-July last year Northern Ireland had an unemployment rate of 4.4 per cent, which has since increased by an above average 1.3 percentage points.
Regional analysis by gender is also interesting. While the unemployment rate for men is higher than the rate for women in all regions except London, there are three regions where more women than men have lost their jobs since the recession started – in the East Midlands, North West and London the precentage point increase in unemployment has, so far, been greater for women.
We aim to publish our Recession Reports as soon after the unemployment statistics are released as possible (slight delay this month due to staff illness). If you’d like to be added to our regular mailing list, please let us know (just comment below, and we’ll email you back to confirm).