How likely is 10% unemployment?

It will take just 660,000 further job losses to bring the UK to 10% unemployment; we are much closer to the ‘1 in 10’ unemployment disaster than you might think.

The employment numbers last week show the enormous dividend Labour has bequeathed the economy. Comparing employment versus the previous two Conservative recessions shows how much we have to lose if we sink into a double dip without Labour’s active labour market policies.

As Paul Gregg and Jonathan Wadsworth highlighted in their review of the UK Labour market, the employment effects of the recession were dampened by the direct “non-orthodox” interventions by Labour in such policies as the Future Jobs Fund (Graph 1 shows the employment index through the last three recessions). As a result, at this point in the cycle, employment is 5.3 percentage points higher than under Conservative labour market policies.

Graph 1:


In terms of numbers, that is 1.5 million more people in employment than would be otherwise. (Graph 2 shows the difference between the indices on the chart, averaging between the 1980-81 and 1990-91 employment effects, and using 2008 employment levels).

Graph 2:

Jobs-saved-per-quarter-q1-08-q2-11
In previous Conservative recessions growth in employment only began to recover 16 quarters after the start of the recession; under Labour’s policies it slowly started growing Q1 2010. We are currently 14 quarters from the start of the 2008/9 recession, and if there had been no policy changes, we should be expecting employment to start growing significantly in the next 6 months.

The effect on the labour market of the UK suffering the lowest growth rate in the OECD is highlighted by the recent Quarterly CIPD/KPMG survey. It is now forecasting a labour market contraction, with both their current and long term (six-month) employment survey index now negative.

But the active labour market policies have also been dismantled. Some of the 1.5 million whose jobs have been saved, could now swiftly end up on the dole. Add to that a possible 200,000 students who are not going to get university places, and we have at least 1.7 million jobs at risk.

And given that it will take just 660,000 further job losses to bring the UK to 10% unemployment, we are much closer to the ‘1 in 10’ unemployment disaster than you might think.

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16 Responses to “How likely is 10% unemployment?”

  1. Political Planet

    How likely is 10% unemployment?: It will take just 660,000 further job losses to bring the UK to 10% unemploymen… http://t.co/ZwS6FnI

  2. Cormac Hollingsworth

    With no active labour policies, if output slumps, how likely is 10% unemployment? http://t.co/ayjzCR0 @leftfootforward

  3. Tim

    RT @leftfootfwd: How likely is 10% unemployment? http://t.co/QTIcPYR

  4. WWW For My

    How likely is 10% unemployment? http://t.co/SpkDR3K by @CormacHolly

  5. Nicola Perkins

    How likely is 10% unemployment? http://t.co/SpkDR3K by @CormacHolly

  6. Terry Firmer

    “@leftfootfwd: How likely is 10% unemployment? http://t.co/0wr7lQD by @CormacHolly”<v likely thanks to hopeless ConDem govt #noplanB

  7. Extradition Game

    RT @leftfootfwd: How likely is 10% unemployment? http://t.co/eJdNTqg by @CormacHolly #NewsClub

  8. Chris

    You know that Labour left office over a year ago, don’t you?

  9. Mr. Sensible

    No growth strategy, no jobs strategy. Great…

  10. Hens4Freedom

    RT @leftfootfwd: How likely is 10% unemployment? http://t.co/39DL6ud by @CormacHolly #NewsClub

  11. Michael

    How likely is 10% unemployment? l Left Foot Forward – http://j.mp/pPqUMf

  12. Peter Durant

    How likely is 10% unemployment? l Left Foot Forward – http://j.mp/pPqUMf

  13. Robert

    The fact is this was a Labour recession, remember when Blair came to power he decided to lower employment with his pen as did Thatcher, now we have people claiming benefits and the economically inactive two seperate groups of people.

    I think blaming this down turn on the Tories will not wash

  14. Neil Foster

    Good article. Must point out we already have 10% unemployment…in the North East of England according to the latest ONS figures. Currently in the region there are 8 jobseekers per job vacancy. We have a profound jobs shortage and the cuts to the public sector will be disproportionately felt here and impact on women the most. In the first 9 months since the Coalition government was formed we lost 34,000 women from the region’s workforce. Another hidden story from this crash and austerity crisis is ‘underemployment’ – there are currently more people in part-time jobs wanting full-time jobs than at any time since records began. It all inhibits household income and spending and making it harder to stimulate local economies. We need a Plan B.

  15. Leon Wolfson

    @1 – Yes, it’s amazing how much damage the Tories have managed to do in just a year, isn’t it.

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