It’s not just me who thinks unemployment will rise

Posted on

I have been a pessimist on unemployment for a long time – believing that the ConDems will deliver 4 million unemployed before their policies are reversed.

I’m not alone in being a pessimist. The Guardian has a survey of experts on the issue today, and it’s gloomy reading. I quote selectively:

Andrew Goodwin at the Ernst & Young Item Club

These figures confirm that the improvement in the labour market, seen in the middle of the year, has ground to a halt.

[A]ll of the ILO indicators show worrying trends, with unemployment and inactivity rising.

Further evidence of a fragile labour market come from another steep decline in the number of full-time workers, allied to rises in the number of people being forced to accept part-time or temporary work because they can't find a full-time job.

[R]ecent business surveys suggest that firms remain wary of hiring.

There is little in the way of good news in this release.

Ian Brinkley, associate director of The Work Foundation

The labour market recovery has stalled, but it is premature to talk about a "double-dip" recession.

The bigger concern is that we have still seen no turn-round in full-time jobs.

Until full-time jobs start to increase again the labour market will not be able to absorb large-scale job losses in the public sector. Unemployment in 2011 must then inevitably rise.

Nigel Meager, director of the Institute for Employment Studies

Unemployment stands at 2.5 million, having risen by 35,000, and it is clear that conditions remain very tough for jobseekers, with 5.5 unemployed people for every vacancy.

Charles Davis at the Centre for Economics and Business Research

In many cases, businesses are still too cautious about future prospects to aggressively expand headcount, especially ahead of a year in which the VAT rise and the effect of soaring commodity prices will squeeze households.

David Birne, an insolvency practitioner at HW Fisher

The latest unemployment figures are a taster of what is to come in 2011. This time next year we expect unemployment to be considerably higher than it is at present, as many more of Britain's companies go to the wall.

For the UK's businesses and their employees, 2011 is shaping up to be harsher than any of the past three years.

Anyone who thinks the private sector can take up the slack from the public sector is out of touch with what's happening on the ground.

Howard Archer at IHS Global Insight

The labour market data are pretty disappointing overall and will do little to ease concern that unemployment is likely to rise in 2011 in the face of slower growth and increasing job losses in the public-sector.

Even if inflation expectations rise further, this is unlikely to translate into markedly increased pay awards as workers appear to have little bargaining power given high unemployment and an uncertain labour market outlook. Indeed, with real wage growth negative and the major fiscal squeeze increasingly kicking in from the start of 2011, it is hard to see consumer spending being anything else than limited for an extended period.

Admittedly, most of them aren’t as gloomy as me. But their words don’t fit their numbers in most cases. I stick by 4 million unemployed – I can’t see how it can be much less if there continue to be significant falls in public sector employment and no expansion in the private sector – which all agree is highly unlikely.

Take note George – people think you are wrong.

You’d better keep working on that alternative Gus – your bosses are going to need it.