From the TUC

Difficult times ahead: our second Recession Report

19 Dec 2008, by in Economic Reports, Economics

Today we have published our second TUC Recession Report. Since we produced our first analysis the news has been dismal. The latest figures from Eurostat show that the economy has been shrinking in both the UK and the Euro area, and that this country entered the recession ahead of most other European countries. Independent economic forecasters are predicting that 1.6 million people will be claiming JSA by the end of 2009, and this is looking increasingly conservative. The latest data show that the claimant count rose by 75,700 just in November.

There is a similar picture of rapidly rising redundancies, and long-term unemployment (over 12 months) has also increased as well. We believe this picture will almost certainly get worse – if employment figures are a ‘lagging indicator’ for the economy overall, long-term unemployment is a lagging indicator for jobs. In the last recession long-term unemployment followed the same trend as overall unemployment after a gap of about 6 months. If this recession follows the same pattern, we can expect next year’s figures for long-term unemployment to start showing significantly larger increases than those for all unemployment.

In the Recession Report series we also consider how particular areas of policy are affected by recession – and this month we look at skills. In a marked contrast to the previous two recessions, the Government is making great efforts to boost investment in skills. The research evidence supports this policy stance.  For example, research undertaken by the Sector Skills Development Agency in 2007 shows that firms that don’t train are 2.5 times more likely to fail than those that do.

The previous focus on developing a wholly employer-led skills strategy has been tempered and Ministers are now talking about a new strategic skills policy, including a coordinated skills response to the downturn.  A key element is to boost training and skills opportunities for people who are unemployed as well as supporting skills investment among the existing workforce.  The aim is to safeguard as many jobs as possible and to support unemployed people to return to sustainable employment. We agree with the broad Government approach – but also have several ideas for where they can do more!

These reports will be produced each month over 2009. Do let us know if there are particular policy issues you’d like us to discuss. You can follow the series of reports at