Employment and the election: Three to watch this week
Week three of the election, and with the health of the economy featuring highly in the battle for votes, we’re going to be looking very closely at what we can learn from three new sets of official statistics.
The first will be tomorrow’s unemployment figures. Unemployment is lower in this recession than in previous ones, but that doesn’t mean that it’s no longer a problem. Tomorrow we’re hoping to see movement on a few important indicators:
- Claimaint count: Last month saw the number of dole claimants fall by 32,300 – the fastest fall since 1997. Another sharp fall in this week’s figures would indicate the UK labour market is recovering well from the recession.
- Economic inactivity: A fall in the number of economically inactive people (excluding students) to below 5.82 million would show that unemployed people are moving back into work rather than becoming permanently detached from the labour market.
- Full-time jobs: The number of full-time jobs fell towards the end of 2009. We’re hoping the latest figures will show an important recovery in full-time employment.
Unemployment and the deficit are closely linked, as tackling unemployment is a way for the Government to save serious amounts of money. During the 1980s, when there was very little intervention to help those out of work, government spending on unemployment benefit peaked at £4.8 billion in 1981/82 and remained above £3 billion for much of the decade. Spending peaked at £2.7 billion after the 1990s recession.
Spending after the recent recession is projected to peak at £1 billion and is forecast to fall during the current financial year. We believe this is largely because government action has been very different to previous recessions.
Then on Thursday we’ll get new figures on public borrowing, which are currently expected to confirm borrowing in 2009-2010 as being below the Chancellor’s original forecast. If this holds, it would show that investing in jobs, which result in both higher tax receipts and lower benefit spending, is the best way to tackle the deficit.
And Friday sees the publications of the preliminary estimate of first quarter 2010 UK GDP growth. Here we’re expecting to see modest growth and a further rise in manufacturing output. Good news, but meaning the economy is still fragile and still reliant on public investment.
Of course the UK can’t keep a deficit of this size forever, but the more sustainable way of reducing it is to encourage growth and get people back into work. Cutting back on public investment now could plunge the economy back into a double dip recession and send unemployment soaring.
We’re hoping this week of important economic indicators will bring harder questions to our politicians of all stripes about exactly how they intend to tackle unemployment and secure economic growth.