Jobs in the recession

March 18, 2009 12:27 PM

It may not be surprising news, but today's announcement by the Office for National Statistics (ONS) - that unemployment continues to climb relentlessly upwards - reminds us that we are far from feeling the worst of this recession.

The ONS data shows that the number of officially unemployed people in the UK has passed two million (to 2.3 million), the first time to have done so since 1997. Across the country 283,000 jobs were lost last year (Jan-Dec 2008), and insolvencies and redundancy since January 2009 would push this figure significantly higher. The benefit claimant count rose to 1.39 million in February 2009, up 595,600 over the year to date, and up 138,400 on the previous month alone. As the ONS release states, this is the "largest monthly increase in the claimant count since comparable records began in 1971". There are still jobs available, but the number is falling; the 482,000 job vacancies in the three months to February 2009 is
down 74,000 on the previous quarter, and down 203,000 over the year;
"This is the lowest figure since comparable records began in 2001."

Economists and business groups are predicting that unemployment will continue to rise, topping 3 million in 2010. On top of this, pay freezes are becoming common, as companies are looking to cut costs but keep staff. Unions such as the TUC are sensibly encouraging members to accept pay freezes - or even cuts - in the interest of saving jobs. Less pay is no doubt better than no pay. And many should remember this when discussing the prospect of the state subsidising wages. The taxpayer is already going to have shoulder an enormous burden supporting and retraining the millions out of work. It can not afford to 'top-up' the pay of those in work. Many tough choices are going to have be made in this recession, often with political consequences, but a responsible Government must make them.

And it must start with a move to freeze public sector pay. Another ONS release today reveals that the public sector continued to grow in the last quarter of 2008, confirming many people's notion that it is somewhat 'recession proof'. 15,000 people joined the public sector in the final quarter of 2008, pushing to total employed by the state and the taxpayer to 5.78 million. There are divisions within the public sector itself of course; local government seems to be suffering a disproportionate share of the pain in this recession, shedding 6,000 jobs in the last 3 months of 2008, while the central civil service lost 1,000. Conversely, employment by central government rose by 19,000, and by public corporations by 2,000. And these rises can not just reflect a trend of more people working in job centres and schools.

John Philpott, Chief Economist at the Chartered Institute of Personnel
and Development (CIPD), commented earlier today that
cutting public sector jobs at this point in the economic cycle might be foolish. There is something in this perhaps. I agree that people in work are better than people on benefit, but we must remember that whether a pr job in a quango or on benefit, it is the taxpayer who is paying for them, and neither is as beneficial to the UK (in the long term) as a wealth producing job in the private sector. And the public sector jobs issue is not just about numbers. Mr Philpott goes on to stress that ministers must take a much tighter grip on public sector pay:

“What the government could and should do, however, is put a clamp on
public sector pay rises. With the private sector in dire straits, and
inflation for now giving way to deflation, there is no labour market
necessity or strong economic justification for public sector earnings
to rise faster than private sector earnings.
 
“Cash strapped
private businesses are asking staff to make sacrifices to save jobs.
The government and public sector employers should do likewise,
redirecting savings on wage bills to help combat the rising toll of
unemployment. Public sector employees have a vital role to play in
dealing with the consequences of recession. But part of that role is
sharing the burden of pain, which at the moment is being borne solely
by their private sector counterparts.” 

It is to state the obvious that no-one wants to be paid less, or in this case, be denied the rise they believe they have earned. But cut backs are just reality now, and public sector workers, just like their private counterparts in car factories and elsewhere, should be volunteering to have their pay freezed for the foreseeable future. The alternative is that colleagues will be sacked. This is the choice, the tough decision facing the public sector and the Government. Perhaps if parts of the public sector started voluntarily opting to have pay freezed and benefits cut, alleviating the burden on the taxpayer, guaranteeing services and maybe even saving other public sector jobs, hardened cynics such as I might just believe the argument that people go to work for the public sector out of some sense of duty and public service. Till then though, the cynicism will be well placed.

It may not be surprising news, but today's announcement by the Office for National Statistics (ONS) - that unemployment continues to climb relentlessly upwards - reminds us that we are far from feeling the worst of this recession.

The ONS data shows that the number of officially unemployed people in the UK has passed two million (to 2.3 million), the first time to have done so since 1997. Across the country 283,000 jobs were lost last year (Jan-Dec 2008), and insolvencies and redundancy since January 2009 would push this figure significantly higher. The benefit claimant count rose to 1.39 million in February 2009, up 595,600 over the year to date, and up 138,400 on the previous month alone. As the ONS release states, this is the "largest monthly increase in the claimant count since comparable records began in 1971". There are still jobs available, but the number is falling; the 482,000 job vacancies in the three months to February 2009 is
down 74,000 on the previous quarter, and down 203,000 over the year;
"This is the lowest figure since comparable records began in 2001."

Economists and business groups are predicting that unemployment will continue to rise, topping 3 million in 2010. On top of this, pay freezes are becoming common, as companies are looking to cut costs but keep staff. Unions such as the TUC are sensibly encouraging members to accept pay freezes - or even cuts - in the interest of saving jobs. Less pay is no doubt better than no pay. And many should remember this when discussing the prospect of the state subsidising wages. The taxpayer is already going to have shoulder an enormous burden supporting and retraining the millions out of work. It can not afford to 'top-up' the pay of those in work. Many tough choices are going to have be made in this recession, often with political consequences, but a responsible Government must make them.

And it must start with a move to freeze public sector pay. Another ONS release today reveals that the public sector continued to grow in the last quarter of 2008, confirming many people's notion that it is somewhat 'recession proof'. 15,000 people joined the public sector in the final quarter of 2008, pushing to total employed by the state and the taxpayer to 5.78 million. There are divisions within the public sector itself of course; local government seems to be suffering a disproportionate share of the pain in this recession, shedding 6,000 jobs in the last 3 months of 2008, while the central civil service lost 1,000. Conversely, employment by central government rose by 19,000, and by public corporations by 2,000. And these rises can not just reflect a trend of more people working in job centres and schools.

John Philpott, Chief Economist at the Chartered Institute of Personnel
and Development (CIPD), commented earlier today that
cutting public sector jobs at this point in the economic cycle might be foolish. There is something in this perhaps. I agree that people in work are better than people on benefit, but we must remember that whether a pr job in a quango or on benefit, it is the taxpayer who is paying for them, and neither is as beneficial to the UK (in the long term) as a wealth producing job in the private sector. And the public sector jobs issue is not just about numbers. Mr Philpott goes on to stress that ministers must take a much tighter grip on public sector pay:

“What the government could and should do, however, is put a clamp on
public sector pay rises. With the private sector in dire straits, and
inflation for now giving way to deflation, there is no labour market
necessity or strong economic justification for public sector earnings
to rise faster than private sector earnings.
 
“Cash strapped
private businesses are asking staff to make sacrifices to save jobs.
The government and public sector employers should do likewise,
redirecting savings on wage bills to help combat the rising toll of
unemployment. Public sector employees have a vital role to play in
dealing with the consequences of recession. But part of that role is
sharing the burden of pain, which at the moment is being borne solely
by their private sector counterparts.” 

It is to state the obvious that no-one wants to be paid less, or in this case, be denied the rise they believe they have earned. But cut backs are just reality now, and public sector workers, just like their private counterparts in car factories and elsewhere, should be volunteering to have their pay freezed for the foreseeable future. The alternative is that colleagues will be sacked. This is the choice, the tough decision facing the public sector and the Government. Perhaps if parts of the public sector started voluntarily opting to have pay freezed and benefits cut, alleviating the burden on the taxpayer, guaranteeing services and maybe even saving other public sector jobs, hardened cynics such as I might just believe the argument that people go to work for the public sector out of some sense of duty and public service. Till then though, the cynicism will be well placed.

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