Recession Report #12: unemployment still rising but increases may be starting to slow
Today we have published our 12th recession report, which considers the labour market figures for June-August 2009. The second part of the report looks at child poverty and the recession, considering what the implications of the recession could be for poverty and inequality.
The labour market data suggest that while unemployment is likely to continue to rise into 2010, the rate at which levels are increasing may be starting to slow. In addition, despite the largest falls in GDP on record, unemployment and employment have not been as badly affected as in previous downturns.
In fact, unemployment accelerated far faster in the 1980s recession than during the current downturn. Employment is also holding up better than many anticipated, with falls in employment rates so far slower than in the 1990s or the 1980s. Rising unemployment, and falling employment, are by no means behind us. But it could be that policy decisions taken during this recession will mean that fewer people lose their jobs than could have been the case, particularly given the extent of the fall in GDP.
We also consider the growing problem of under-employment. After falling at the start of the recession, the proportion of employees who are in temporary jobs is now 5.7%, the same rate as January 2008. But far more temporary workers are now undertaking temporary jobs because they can’t find permanent work than was the case a year ago. Increasing proportions of part-time workers would also rather be in full-time work. The rise has been particularly sharp for men, although proportions of part-time workers who would prefer full-time jobs have not been this high, for either men or women, since 1997. In total, 976,000 part-time workers (544,000 women and 436,000 men) would rather be in full-time jobs (over 3% of the employed population).
The Recession Report then attempts to answer some questions that we think will be increasingly important issues during the forthcoming general election. What are the implications of the recession for poverty and inequality? What are the implications for people in poverty of the debate about cuts in benefits? Is the recession going to make it harder to end child poverty?
Our analysis makes clear that future Government policy on benefits and tax credits will play a decisive role in determining the extent of post-recession child poverty. We show that a Government commitment to uprating tax credits and benefits at least in line with inflation is vital in determining both whether a recession will increase inequality and the amount of relative poverty. The fact that such a high proportion of the incomes of the poorest depends on benefits and tax credits also means that policy here is central to the impact on absolute poverty. We therefore conclude that it is unfortunate that the Opposition have repeatedly refused to guarantee that, under a Conservative Government, benefits and tax credits would continue to be uprated at least in line with inflation. Indeed, there has been no guarantee that they would not be frozen, or even cut. The impact that this recession will have on child poverty remains far from certain.