Connected Research

Union policy research in the 21st century

Posts Tagged ‘Job loss

Recession Report No. 16

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The TUC’s last Recession Report was published yesterday and can be accessed via Nicola Smith’s post over at ToUChstone. The topical theme of this issue, in the week that saw International Women’s Day and the TUC’s 2010 Women’s Conference, as well as the launch of a specific TUC report on Women and the Recession, is the impact of the recession on working women. Inevitably, there is a degree of overlap between the two reports.

The headline labour market stats are that 2.457m people are out of work (more or less unchanged on the month and the quarter, but 448,000 up on the year), representing an unemployment rate of 7.8% (again, unchanged on the month and quarter but up by 1.4 percentage points on the year). Some 28.9m people are in work, representing an employment rate of 72.4% (down by 1.7 points on the year). The TUC remains concerned about the numbers of people who are working on a part-time and/or temporary basis involuntarily, and about long-term unemployment, both of which it sees as a sign of a continuing ‘serious weakness’ in the labour market.

Employment rates for both men and women have fallen during the recession but on a far smaller basis than in previous recessions, largely due to involuntary part-time working acting as something of a cushion. The proportion of women who are economically active (not necessarily in employment but looking for work) has also continued to rise in the recession, to a figure of 74.4% (the highest on record) – in contrast to previous recessions. The biggest barrier to female employment remains opportunities to balance work and family life: 41% of women who are inactive but who want a job are looking after a home or family.

The fall in the employment rate has been lesser for women than men, but this is a result of the predominance of women in the public sector, which takes around 40% of women nationally compared to around 15% of male workers. Consequently, large-scale public spending cuts are likely to give good reason to imagine that unemployment may well resume its upwards rise, and may well cause serious hardship to families where a second round of redundancies, this time predominantly amongst women, falls in areas of existing high unemployment.

Given that the public sector is also more likely to provide work-life balance arrangements, spending cuts may well see a reversal of the trend in women’s economic activity rates: representing another aspect of the social, as well as economic, disaster that such cuts would represent.

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Written by Calvin

11/03/2010 at 2:00 pm

Posted in Economic trends

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TUC Recession Report No. 15

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The TUC has just produced its latest Recession Report, accessible here at Nicola Smith’s ToUChstone blog posting. This is the penultimate in the series given that data shows the economy no longer to be contracting – so an official, if somewhat marginal, end to the recession has been achieved. (On this point, see also Adam Lent’s post on why the recovery has been so anaemic in the UK).

The headline data are that: 2.458m are unemployed (down on the month and on the quarter, but up by more than half a million on the year) – at a rate of 7.8% (a slight drop on the month and unchanged on the quarter, but up by 1.6 percentage points on the year). The employment rate of the working age population now stands at 72.4%, down by 0.1 percentage points on the quarter and by 1.7 points on the year. The headline figures are, once again, more positive than expected but evidence of a sustained recovery on the employment market is not yet here and long-term unemployment also continues to demonstrate cause for concern.

The second part to the Report continues the social theme of the previous edition’s specific area of focus, which looked at the effects of unemployment on physical and mental health, by looking at the other social effects of recession, including on poverty, happiness, family life, crime, drug and alcohol use and on the prospects for the children of unemployed people. Nicola had blogged previously on the question of how a ‘social recession’ could be measured and had suggested that the view was, on the whole, satisfactory despite some areas of concern. Here, too, the report argues that, while the UK is weathering this recession rather better than those of the 1980s and 1990s, the negative social effects of rising unemployment will continue to cause damage for some years to come. An important lesson for those advocating harsh cuts to expenditure: cuts are not only economically regressive, they leave the social scars festering, too.

Written by Calvin

29/01/2010 at 2:05 pm

Posted in Economic trends

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TUC Recession Report No. 14

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The TUC has published its most recent Recession Report, which can be accessed via Nicola Smith’s blog posting on ToUChstone here.

The headline facts are that 2.491m people are unemployed, at an unemployment rate of 7.9%. Unemployment has increased by 30,000 on the month and 608,000 on the year, while the rate is unchanged on the quarter but up by 1.9 percentage points on the year. The employment rate is currently 72.5%, with no change on last month or on the quarter, but down by 1.7 percentage points on the year.

So, the figures on unemployment continue to show a slowing trend but that recovery remains a good way off, with unemployment unlikely to fall for some time after the economy emerges from recession. Part-time working shows a sharp increase, partly as a result of involuntary part-time working; the number of discouraged workers  (those becoming economically inactive because they cannot find work, but who don’t as a result show up in the unemployment figures) is on the increase; and long-term unemployment is on the rise.

This month’s special focus of the report is the links between unemployment and physical and mental health, with a lengthy review of the literature on the issue (to which a commentator on the blog has usefully added further references). Evidently, unemployment adds insecurity and stress to everyone, including those out of work faced with increased money, security and relationship worries, while those in employment are faced with higher workloads and the fear of the dole. Individuals’ mental health can be fragile enough and the pressures caused by recession are often sufficient to deepen, as well as to widen, the worries which affect mental health. Reason enough, as the report argues, to require proper policy attention to unemployment and for a clear strategy to deal proactively with it.

Written by Calvin

08/01/2010 at 8:30 pm

Posted in Economic trends

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TUC publishes thirteenth Recession Report

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The latest in the TUC’s series of reports on the recession – Moving towards a fragile recovery – is now up on ToUChstone.

Nicola Smith’s blog post is so titled given that falls in employment are showing signs of pausing while there may be some sign of a recovery in employment levels. Nevertheless, the labour market remains fragile:

– employment levels are still falling for young people under 24

– long-term unemployment is still rising

– there is a rising number of people in employment who are in more insecure forms of it – in temporary or part-time work. A proportion of this will be involuntary based on an inability to find fixed, full-time work. Earlier this year, the TUC suggested that one in nine part-time workers were involuntary, although current figures quoted in this report indicate a level rising to over 13%, while the proportion of involuntary temporary workers has risen to nearly one-third. This would be a natural development in a recession (while the proportion of involuntary temporary workers will be rising at this time of year anyway) and the increasing rates would seem to show that the recession (at least, in the labour market) has some course yet to run. The rise in part-time employment in the UK is also higher than the EU average.

This month’s special focus is on international comparisons and shows two main developments:

– the UK employment rate (69.6%) remains around five percentage points higher than the average rate across the EU, although the decline in the rate is, at two percentage points, also 0.1 points higher than the average. (The drop in the UK employment rate is actually the fifth largest, behind Ireland, Spain, Finland and Portugal.)

– schemes for short-time working remain more prevalent in other OECD economies and the UK spending on active labour market measures remains both small and well below the OECD average.

The report concludes that the UK performance during the downturn has been ‘average’. Certainly, it is close to the average figure on key labour market measures – a sign of the integration of the UK labour market with that of the rest of the EU and also an achievement given that the downturn in the UK has been sharper, and has lasted longer, than in many other countries. Thus it is likely that the government has indeed got some things right in all this. As the TUC warned earlier this week, the danger now lies in premature action to close the deficit and in stopping the stimulus package, thus choking off what fragile signs of recovery there already are.

Written by Calvin

26/11/2009 at 6:01 pm

Posted in Economic trends

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BT’s pensions deficit: a little reminder

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BT announced its second quarter and half-year results this morning. Aside of the usual accounting-based shenanigans over whether Q2 profits have gone down by 44% or increased by 2%, much of the press comment has focused on two issues: the state of the deficit in the BT Pension Scheme; and the scope of likely future job cuts.

The £9.4bn deficit in the BTPS that is being reported represents what accountants estimate the deficit would cost under the IAS19 measure. Under IAS19, ‘the cost of providing employee benefits should be recognised in the period in which the benefit is earned by the employee, rather than when it is paid or payable’. This may well be a prudent assumption in financial accounting terms, but it is a rather unrealistic set of assumptions in terms of how pensions are provided which – for example – takes no account of the investment returns which will (hopefully!) be earned in the period between when those benefits are accrued and the point at which they are actually cashed. We should also note that this £9.4bn is a gross figure – net of tax, it comes down to £6.8bn.

The most important figure we need to note in terms of the scale of the actual pensions deficit – the triennial valuation – is still unknown. This was due at the end of December 2008 and is the only figure that counts in pensions terms: it is this that will assess formally the cost of the past deficit and a recovery plan in which this must be made good, as well as setting a contribution rate in respect of future service (which will, in future valuations, be much lower as a result of the changes made to the benefits structure of the BTPS as from 1 April 2009). However, the company, the trustees of the scheme and the Pensions Regulator have been locked in discussions ever since about some of the assumptions on which the valuation will be based. Unfortunately, but inevitably, this has led to speculation not just about the basis of those discussions but also the scale of the deficit. It has been reported, however, that a conclusion to those discussions is ‘unlikely this year’.

Once Connect has further word on what the valuation says, we will be communicating with members.

The Times report of the accounts announcement today also refers to an ‘about to begin’ consultation by Ofcom on whether BT’s pensions costs can be taken into account in setting prices (a story it carries in slightly fuller detail, without quoting anything specific from Ofcom here). A similar consideration featured earlier this year in the Ofcom consultation on Openreach’s cost structure and the regulator then, despite the submission by Connect and the CWU, set its face against Openreach being able to take a share of that deficit in its prices. That is a slightly different issue to one concerning how company-wide deficits feature in the the corporate pricing plans of even regulated companies – but we will be arguing with Ofcom the same point as we argued over Openreach: the deficit has to be owned by someone and represents a part of the costs of any company which must be taken into account in how it sets its prices.

On the issue of job loss, Vodafone and BT seem to be playing a rather unhealthy game of catch-up on cost reductions: Vodafone earlier this week inflated its own prospective cost savings to £2bn for this year and now BT is doing something similar, inflating its target from £1bn to £1.5bn. BT employees will be feeling the pressure of the impact of such announcements, especially in a situation in which the company is being openly vague about the future of its Newstart programme. Again, if we have any word that BT’s continuing job loss programme is to be stepped up, we will be communicating directly with members.

One final observation: the company intends to increase its full-year dividend to shareholders by 5%. Nice to know that the shareholders are being looked after despite what is happening on jobs and pay for BT workers but – aside of that – my observation would be that a company that is looking at increasing its dividend does not generally see itself as a struggling one.

Written by Calvin

12/11/2009 at 1:00 pm

TUC Recession Report No. 12

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The TUC has published its most recent commentary in this insightful and well-researched series today – you can access it via Nicola Smith’s posting for the TUC’s Touchstone blog here.

The headline figures are that unemployment in the June-August period is, at 2.47m, static on the previous month’s figures (for May-July), but higher than the same period in 2008 by 677,000. The unemployment rate is 7.9%, an increase of 2.1 percentage points on 2008, while the employment rate was 72.6% – 1.8 percentage points down on the same point in 2008 but an increase of 0.1 points on the figures for the previous month.

The TUC comments that unemployment is likely to continue rising into 2010 – small falls in unemployment, or rises in the employment rate, may be more of a blip than a sign of the corner being turned – but the rate at which it is increasing may be beginning to slow. Certainly this recession, despite its length and the sharpness of the drop in GDP, has had a lesser impact on employment than we could have expected on the basis of previous recessions – perhaps a testament to the policy decisions taken at an early stage in the recession.

This month’s special analysis focuses on child poverty not least in the light of the potential impact of the recession on the government’s 1998 commitment to end child poverty by 2020 – to which all the major parties are now committed. Recent progress has been poor and it looks likely that the 2010 milestone of halving the 1998-99 level of child poverty will be be met. However, taxes and benefits do substantially reduce poverty levels and are also a powerful force to reducing levels of inequality – it is unlikely that as much progress as had been made during the 1990s would have been achieved under a government less concerned with harnessing the tax and benefit system towards such aims.

Protecting the real value of benefits, to say nothing of ensuring that they are not reduced in absolute terms, has a key role to play in ensuring that the amount of relative poverty, as well as income inequality, does not become worse during a recession or in the subsequent recovery period.

Written by Calvin

03/11/2009 at 6:01 pm

Posted in Economic trends

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TUC’s 11th Recession Report

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This was published today and can also be accessed over the usual route via the TUC’s excellent Touchstone blog.

The headline figures from the brief are that ILO unemployment now stands at 2.47m (7.9%) and has risen for 14 successive months. It now stands 743,000 people higher than at the same quarter one year ago. Some 560,000 people have now been out of work for over one year. Meanwhile, the population in work stands at 28.9m – representing an employment rate of 72.5%, a decrease of 2.1 points on the figure one year ago.

The Report also includes some very interesting data on out of work benefits with which to respond to right wing commentators, as well as on lower-paid workers which is the group hit hardest by the recession.

The special commentary this month is on the adequacy of benefit rates for unemployed people. Starting from the perspective that Jobseeker’s Allowance is lower today relative to average earnings (it’s just 10%) than was the case for unemployment benefits in the 1980s (c. 17%) and 1990s (c. 15%) recessions, the TUC is renewing its call for an increase in JSA to at least £75 per week (a £10 increase). This is where JSA would now be if the incoming Labour government in 1997 had re-introduced the informal link between unemployment benefit and movements in average earnings abandoned by – yes, you guessed it – in 1980. The link existed for a very valid reason – it ensures that people out of work over a period of time do not lose relative ground on those remaining in work, thus holding back the growth of inequality given the obvious links between existence on benefits and families in poverty.

Written by Calvin

25/09/2009 at 6:03 pm

Posted in Economic trends

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