From the TUC

Spending cuts mean high unemployment is here to stay

10 Sep 2010, by in Labour market

Today, as has been widely reported, we have published new analysis that looks at private sector jobs growth over the past decade (from the pre-recession peak in each region) and the future likely outlook for the jobs recovery. The findings are grim. Even if the next decade sees private sector jobs grow at a faster rate than they did before the recession, it will take over a decade for the jobs lost during the recession, and the public sector job losses that are to come, to be replaced.

The impacts of cuts vary significantly among regions – in general, even during the boom years regions in the North saw far less private sector jobs growth than those in the South and have also been more dependent on the public sector for jobs creation. This means that unless there is a considerable change in the rate at which the private sector creates work, it could take these regions over 20 years just to get back to pre-recession employment levels.

The Coalition is keen to talk of ‘re-balancing‘ the economy. But we have yet to see much evidence of what this means in practice. A three year national insurance holiday for business start-ups taking on staff (it would be interesting to know how many start-ups generally take on new employees during their early years of trading – I would suspect the numbers are low) and a £1 billion growth fund split across the UK are not going to cut it:  even during the last decade of sustained public investment and strong economic growth private sector jobs in many Northern regions only grew slowly, if at all.

The reality is that cuts of the scale and speed the Coalition are proposing will hit the private sector as much as the public sector, will reduce local demand as well as direct private sector investment, will mean unemployment is likely to rise in the immediate term (as the OBR have forecast) and that unemployment levels are likely to stay high for some time. After the 1980s and 1990s recessions public sector jobs growth was a strong driver of the recovery – this time around we still don’t know where the jobs are going to come from, but we do know there will be less of them.

3 Responses to Spending cuts mean high unemployment is here to stay

  1. We aren’t going to export our way out of this mess | ToUChstone blog: A public policy blog from the TUC
    Sep 10th 2010, 2:24 pm

    […] Nicola shows in a new analysis, it will take a very long time for private sector jobs growth to make up […]

  2. Georges
    Sep 12th 2010, 7:13 am

    Nicola,

    There have been no cuts in the US. Two items emerging there it seems:

    1) High unemployment seems it is there to stay, and
    2) Poverty is up:

    The number of people in the U.S. who are in poverty is on track for a record increase on President Barack Obama’s watch, with the ranks of working-age poor approaching 1960s levels that led to the national war on poverty.

    Census figures for 2009 — the recession-ravaged first year of the Democrat’s presidency — are to be released in the coming week, and demographers expect grim findings.

    It’s unfortunate timing for Obama and his party just seven weeks before important elections when control of Congress is at stake. The anticipated poverty rate increase — from 13.2 percent to about 15 percent — would be another blow to Democrats struggling to persuade voters to keep them in power.

    http://news.yahoo.com/s/ap/20100911/ap_on_bi_ge/us_poverty_in_america

    Georges

  3. Nick Nakorn
    Sep 13th 2010, 8:07 am

    With our ever expanding global consumer society coming up against the limits of peak oil, climate change, dwindling resources and failing habitats we have to come to the conclusion that tough times are hear to stay and improvements will be mere blips in a trend that towards higher inflation and unemployment in the global economy.

    But what do shrinking habitats, species extinction, peak oil, climate change, pollution and the banking crisis all have in common? Greed and over-consumption. We live on a finite planet and support an unsustainable economic system that requires constant growth to function. What we need is voluntary restraint; we need to limit our wealth and we need to send a firm message to our governments that we, as citizens have standards of ethics to which we will hold our political leaders and corporate managers.

    And it must not be the poor that pays.

    My suggested mechanism is The Sirisuk Declaration – a Charter for Global Citizenship and Political Activism. More consumption and exponential growth can not possibly be sustainable.
    To read about and sign the Declaration please go to http://www.sirisuk.org

    best wishes

    Nick