Britain’s labour market proved to be surprisingly resilient during the recession, with a larger number of people currently in work than in 2008 despite the plunge in the economic situation in the four years since. However, with fears of a further dip in the UK’s economy running high, this story may change as the country welcomes in the New Year.
The New Year could be difficult for job seekers
Since the start of 2008, more than 66,000 of the nation’s unemployed have managed to find work – although the fact that output has dropped by 3 per cent in the same period seems to indicate that employers are now hiring more people to do fewer tasks. Yet with a decidedly gloomy undertone regarding the future of the economy underpinning Chancellor George Osborne’s Autumn Statement last week the fear is that employers will cease hiring altogether, and perhaps even go as far as laying off existing employees.
Chief economist for Markit, Chris Williamson, warns that even slight signs of growth may vanish as chief executives of companies nationwide feel the pressure to rein in spending once more.
He says; “The tone is one of greater caution, with cuts in investment and employment.
“Until now there has been strong private sector employment growth – it may not have been in high quality full time jobs but it was growth.
“Now even that is showing signs of disappearing, as the economic outlook is growing dimmer by the day.”
Figures regarding current unemployment levels are due later this week, but October’s results show some worrying results. The number of recipients of jobseeker’s allowance totalled 1.58 million – which is a drop of 10,900 from the previous year but an increase of 10,100 since the beginning of September.
Royal Bank of Scotland economist Ross Walker believes that this could be an early sign of employers reining in spending, especially as part time work continues to rise faster than full time employment.
He says; “The labour market has performed better than expected, especially through the summer, but there are early signs that this is beginning to unwind.
“Profit making firms are likely to have been ‘front loading’ workforces in anticipation of an upturn; this week’s figures may signal that they are having second thoughts.”
Unfortunately, actual unemployment seems to be only the tip of the iceberg for Britain’s workers.
Dr John Philpott, director of The Jobs Economist, has revealed that a work shortage rate of 23.2 per cent will undoubtedly have consequences for the UK when assessing the risk of falling into recession again. Altogether, this figure includes more than 2.5 million unemployed people of working age and ability, 2.3 million people who, for one reason or another, are economically inactive, and a further 3 million workers who consider themselves underemployed.
While, statistically speaking, a large percentage of those cited in the survey have jobs, underemployment is a significant issue for the country. Firstly, the effect upon economic output can be an issue when it comes to international trading – especially in the manufacturing industry – as it appears that employees fail to work to the standards seen in countries with a high output rate. Secondly, many of the workers themselves are failing to earn a proper living wage due to a lack of hours, thus causing stagnation in the economy.
Finally, these figures are hidden by the “employed umbrella”, thus clouding the real and growing problem of unemployment in this country today.
Dr Philpott said; “Unemployment has not reached the levels feared at the start of the financial crisis but it is totally wrong to conclude that the labour market has gotten off lightly.
“On the contrary, the degree of pain inflicted on the labour market has been as severe as expected – it’s just that the pain has been diffused differently than in previous recessions.
“A proper temperature check shows the UK workforce is still shivering with as many as eight million people either fully or partly short of work, despite the welcome job creation of the past two years, and millions more are feeling a real pay squeeze.”
Do you think the resilience of the labour market has been pushed too far to survive another dip into recession, or will employers attempt to keep industries moving by taking on workers at a cost to their companies? How could the issue of underemployment be resolved before it begins to cause real and lasting damage to this country’s output rates?
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