Workers and recession

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Jane Hardy takes issue with a new study which claims that workers haven't suffered too badly in the recession

A recent book edited by Paul Gregg and Jonathan Wadsworth claims to look at what has happened to employment in the UK during the recession. They puzzle about why Britain has had the biggest recession since the Second World War with a fall in GDP of 6 percent, while claiming that the loss of jobs has been relatively "benign".

At first sight this argument has some credibility. The UK has not had the massive increases in unemployment of Spain, Ireland and the US, where job losses have risen much faster than GDP has fallen. Their explanation is that the UK's "soft landing" is because everybody has been "sensible" all round. Firms were "sensible" in trying not to make job cuts and hanging on to skilled workers, the government was "sensible" in injecting a huge fiscal stimulus and workers were sensible in taking wage cuts.

Problems

There are several problems with their argument. First, in its story of success, the book underplays the catastrophic impacts on some groups. Averages conceal the real story. Young people in particular are facing the highest levels of unemployment - 20 percent on average. Alongside cuts in EMA grants and the trebling of university fees, the labour market, current and future, looks bleak.

Young women are bearing the brunt of job losses with the unemployment rate almost doubling among 18 to 24 year olds in several areas since the start of the recession. While young men have long been first in the firing line during downturns, TUC analysis shows that unemployment rates among young women have risen much faster over the past two years. In the south west the unemployment rate among this group has almost trebled, from 5 percent to 14 percent, since early 2008, while it has almost doubled in the north west, Yorkshire, the West Midlands, the south east and Scotland.

Second, it may be the case that firms went into the recession with relatively high profit levels, which in the short term cushioned them from making people redundant.

Profits

However, bosses have to balance maintaining short-term profits against making future profits as the economy recovers, which in a few cases requires "hoarding" skilled workers who they have "invested in". The evidence is that workers have been squeezed in other ways, through being made to work harder or accepting cuts in hours.

Lots of employers in the public and private sectors have cut hours and offered extended holidays or even non-paid gap years. British Telecom offered tens of thousands of its staff the right to take holidays of up to a year if they took a 75 percent pay cut. The Office for National Statistics showed that a growing number of people have had their wages slashed against their wishes. In 2009 nearly one million individuals were working less than 30 hours a week, because they could not find a full-time job. This has little to do with choice.

Third, the book has a chapter on the regional dimension of unemployment that points to the continuation of lower levels of employment and wages in the north - particularly vulnerable in a time of cuts given a reliance on public sector employment. The north east (10.2 percent) and Yorkshire and Humberside (9.2 percent) have much higher average rates of unemployment. Class and geography are interwoven. What is really revealing is the impact on individual local authorities. Overall unemployment in deprived areas has risen much faster than the average: Blaenau Gwent (14.4 percent), Barking and Dagenham (13.0 percent) and Sandwell, West Midlands (14.8 percent) have all suffered badly. Again there is no question of "choice" or it being viewed as "sensible" by those who have lost their jobs.

Fourth, only one chapter has anything to say about other aspects of employment. It concludes that the mental well-being of workers is procyclical (it gets better as the economy gets better), but it is hardly rocket science to predict that well-being is much higher in booms than busts when people are fearful of being made unemployed. Rising stress is reflected in an increase in the number of antidepressants prescribed, from 16 million in 2006 to 23 million in 2011 - an increase of 43 percent during the period covering the banking crisis and housing crash. Dr Clare Gerada, chair of the Royal College of GPs, said, "GPs are seeing more people coming in with debts racking up or who have lost their jobs and are cancelling their holiday." People are therefore not at all happy with the sensible solutions foisted on them.

Stagflation

Unfortunately the book only covers a period ending in 2009. Perhaps wisely the authors don't bother with a conclusion or any future predictions. The reality is that the UK is scraping along the bottom with an average of 0.1 percent growth per quarter. March this year saw the biggest fall in consumer spending since the 1990s. Worse still, rising prices have brought the onset of "stagflation". Job cuts in the public sector have started with a vengeance. However, much worse is to come.

Office for National Statistics data reveal that the cull of public sector jobs started under the last government, but accelerated under the coalition in the last two quarters of 2010.The emergency budget in June took out £1 billion of local government spending in-year. Even official estimates suggest that 330,000 public sector jobs could be lost over the next four years. But according to the prediction of John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development, it will be much higher.

Now more than ever it is vital that all voluntary redundancies are opposed, as this simply amounts to selling someone else's job. There is nothing inevitable about job losses or cuts in hours or pay. Where workers have been organised they have been able to win. Building on this means activists fighting for every job in their branches at the same time as building national campaigns. This is the only sensible solution for workers in the current crisis.

The Labour Market in Winter, edited by Paul Gregg and Jonathan Wadsworth, is published by Oxford University Press