From the TUC

Sweeping unemployment under the carpet

15 Jul 2009, by in Economics, Labour market, Politics

Today’s unemployment figures once again underline that they are going to get a lot worse before they get better. Indeed it is likely to be years before we return to the levels of employment that we saw before the recession began to bite. But my impression is that unemployment is dropping down the media and political agenda (of course with honorable exceptions). It will be interesting therefore to see how the media reports today’s figures. I’m sure that they will receive wide coverage today and tomorrow, but they are not being treated as the national emergency that they are.

Some of this is perhaps understandable – there is only so long that one story can receive saturation coverage, and new issues – such as Michael Jackson and swine flu – will inevitably come along. And while I would prefer otherwise, it is probably true that putting unemployment on the front cover does not sell extra copies.

But is there something else going on?

I think there is – though there is no simple conspiracy. A number of factors are at work.

First, many thought that this was going to be the equal opportunities recession with people in all regions and sectors hit hard. I do believe the TUC said some things somewhat along these lines at the start of the downturn. But like others we were wrong. As the CIPD has said blue collar workers have been hit the hardest. Walking through the centre of London does not provide a great deal of evidence of deep recession. And as we know blue collar Britain outside London is not of much interest to the metropolitan media.

Second, many were probably more scared than they needed to be by the start of the recession. Even when unemployment is high, most people are still in work – and if they are lucky enough to have variable mortgages tied to base rates, even doing rather well. Much of what newspapers (wrongly) think of as middle Britain is unaffected by the recession.

Third, it is likely that strategists in both the main parties don’t want to talk up unemployment. While Theresa May has strong words today, I suspect the Conservatives do not want unemployment to be the main issue during the next election. Folk memories are strong of “unemployment is a price well worth paying”, and their current economic priority of cutting the deficit will make the dole queue longer. Labour will be more conflicted as many will see it as inherently the party that cares more about unemployment, but on the other hand it also does not want the blame for recession and will naturally want to talk up recovery and claim the credit for the policy response to the financial crisis.

And lastly there are lots of vested interests who want to claim the sighting of green shoots. There are an awful lot of people who would lose from a major shift away from the dominance of the finance sector in the UK economy. Many of them are also completely isolated from the actual experience of communities suffering from joblessness. They want to go back to business as usual, deregulation and relaxation about the filthy rich. It is absolutely in their interest to exaggerate recovery too.

Of course there are some signs of the economy doing better compared to a few months ago. Then it was shrinking at a fantastic rate that was never likely to go on for ever. There has also been an aggresive policy response from the government and Bank of England. I don’t claim to really understand quantitative easing, but I do know vast sums are involved and it would be extraordinary if that was not starting to show up in the statistics. Similarly there will be some inevitable pick up in industry as companies run out of stock built up at the start of the downturn.

Of course there is a technical definition of economic recovery, but this is one occasion where common sense definitions make more sense. Bumping along the bottom of a recession with tiny amounts of economic growth and unemployment still rising can meet the technical definition, but it won’t feel much like recovery to those who have lost their jobs.

 But this could change. Adam has already referred to David Blanchflower’s warning today about youth unemployment. Even the daughters and sons of the prosperous are going to find it hard to get jobs this year when they leave school and college. If anything it is going to be rising youth unemployment, that puts the recession firmly at the top of the public policy agenda where it should be.