Unemployment to increase to over 3.5 million

Posted on February 1 2012

The Guardian is reporting this morning that the number of long term unemployed is now forecast to increase by 750,000 to more than 3.3 million over the next four years.

In 2009 I forecast unemployment of 4 million in this recession. At the time I did not anticipate the rise in the number of self employed we have seen, or the drop in productivity that has also occurred over the last couple of years as employers keep people in work at lower effective rates of pay rather than sack them. But if the number of long term unemployed (not all claiming benefit of course) reaches 3.3 million I think it's a safe bet that actual unemployment will also rise by more than 700,000 to in excess of 3.5 million, and depressingly, my forecast of 4 million unemployed now looks within the range of reasonable plausibility.

I take no comfort from the fact I may have been right all along.

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One Response

Teresa Harding says:

February 1 2012 at 12:46 pm

I think that your prediction of 4 million unemployed will prove to be correct, in fact my own feeling is that it will be even more if the Govt continues to tank the economy. I have been worried for some considerable time about the prospects for job creation on any meaningful scale. As I have stated previously, I lived in the urban West Midlands during the 80s and early 90s and witnessed the loss of jobs on a grand scale – steelworks, mines etc. The loss of these jobs was not compensated by the creation of equally paying jobs – sandwich making, coffee shop baristas etc. The rise in self employment, which will probably reduce tax revenues anyway in the long term, is a consequence of lack of formal paid employment. We will soon resemble a third world economy where the majority of employment is in the informal sector.