What's going on with unemployment?

Two and half million people are unemployed in Britain today. Every day the press report more job losses.Yet we are also told that unemployment has not risen as sharply as it did during the two previous recessions in the early 1980s and 1990s under the Tories. Gordon Brown claims this shows Labour has been successful at protecting working people from the worst of the recession. Others claim it’s a result of a “flexible labour market” in Britain, where workers have fewer rights than in the past. What is the real picture? The current recession is the worst since the Second World War. Overall economic output in Britain has fallen by 6 percent since the recession started. But unemployment has only risen by 2 percent. The gap between these two figures can be explained—employers have cut working hours and some firms have only recruited part-time workers. So part-time employment has shot up by 320,000 over the last year. One million part-time workers say they would like a full-time job but can’t find one. Another 1.3 million workers, classed as full-time, would also like to work more hours, or even have a second job to make ends meet.

The total fall in the number of hours being worked each week in Britain is 4.25 percent, much closer to the fall in output. Some bosses have also pushed through pay freezes to cut costs while others have held wage rises to very low levels. One result is that more of the pain of the recession has been borne by those still in work. The collective nature of work also means this is where workers are best placed to fight back. During the 1980s by contrast, wages for those who remained in work generally rose faster than inflation, though unemployment was higher than it is currently. The burden of Thatcher’s attacks fell very heavily on those thrown out of work. There are also some worrying trends in the picture today. The number of those who are long term unemployed has increased to 27 percent of the total, its highest level since 1997. One in five young people aged 16-24 are unemployed.Even if the economy doesn’t slip back into recession unemployment is likely to rise. The high point of unemployment often occurs some time after recessions finish.

So the peak of unemployment following the 1979-81 recession didn’t come until 1984 when it reached 11.8 percent. Likewise, unemployment after the recession of 1990-91 only hit its high point in 1993. Some private sector bosses have held onto skilled labour, preferring to cut hours and hold down wages instead, in the hope of a swift pick up in the economy. They are likely to respond to any modest increase in demand by increasing the hours of existing workers rather than hiring new staff, so keeping unemployment high. But if there is a new plunge into recession they are likely to slash jobs. This is why agreements by trade union leaders to cut pay or hours offers no guarantee of avoiding redundancies. The best defence remains strong union organisation. The one area where employment has held up is in the public sector, as the government has used state spending to shore up the economy. Yet all the main parties are agreed that the savage cuts must be pushed through in the public sector to “balance the books”. The pain among working people may have been more widely spread in this recession than in the past, but the bosses have more in store for us. Strikes, occupations and resistance will be more necessary than ever to make sure they don’t get away with their attacks.