Flat GDP and Falling
Unemployment
There have been a number of explanations of the disparity
between flat GDP and falling unemployment.
A more interesting one can be found here, which suggests that whilst in manufacturing
and particularly mining and quarrying, which are important to the UK economic
output, production has fallen steeply, the numbers they employ are relatively
low. This is in contrast to the services
sector, which has been holding up fairly well and creating jobs, though the trends
in retail don’t look promising. This
site is linked to the TUC, so is critical of government policy even if it got
this idea from the non-left-wing Economist.
Similarly, another TUC sponsored site shows that since the start of the recession the number of
self-employed workers has increased by 333,000, the number of employees has
fallen by 201,000. It may also be the case that many of the
self-employed roles may not be full-time even if they are counted as such in
the figures.
Debt Still the
Problem
Whatever the ups and downs of the GDP figures, we seem to
be bumping along the bottom. Some seem
to think that 2013 will begin to see some improvement – certainly the stockmarkets seem to be acting as if they believe it and some in Davos also were
talking up the outlook. On the other
hand, a deep analysis of the financial crash and its continuing consequences is
provided by Robert Peston in his ‘How Do We Fix This Mess? The Economic Price of Having It All and theRoute to Lasting Prosperity’. It’s not a
book for the faint-hearted. If you think
too much about what he says about the risks that were run by our bankers and
the extent to which much remains to be fixed you won’t sleep well at night.
But his essential thesis is that we have run up huge
amounts of debt in an enormous bubble that has yet to be deflated and until they
are paid down the economy is going nowhere.
This isn’t just public-sector debt, indeed it is more about personal and
private-sector debt. Our banks have had
to rebuild their capital ratios, which means they can lend much less and have become
risk averse. Individuals are paying down
debt and borrowing less, so spending less.
But most of all the debt burden is still huge because ironically in our
desire to reduce hardship many banks are exercising ‘forbearance’ on
individuals with mortgages and loans they can’t repay and on much commercial
property and other debt where crystallising losses would be very painful. We have ‘zombie companies’ and ‘zombie banks’,
many of which are kept alive by government and Bank of England support of the
financial system. By contrast in the US
where you can walk away from an un-repayable mortgage or go bankrupt and start again more easily,
the economy is already back to pre-crash levels of GDP (we are still 4% below
2008 output in a recession longer than the 1930s) and will see higher growth
this year. We could argue about the pros
and cons of Obama’s deficit budgets too but perhaps something of Schumpeter’s ‘creative
destruction’ is necessary?
Peston's prescription is that we need to reduce our debt (in all sectors), and live within our means, which before the crash we patently were not doing - as individuals, corporately and as a nation, including our balance of payments, which has been out of kilter for decades. We need to reduce the size of the City, which is too big for the overall size of our economy and diverts too much money into unproductive rent-seeking (i.e making money from money for its own sake) and instead using banks for what they are supposed to be for, which is to invest in productive industries that produce real goods and services that people need. This would also have the effect of moving talented people into more useful jobs at more sensible salaries, also for the benefit of the wider economy and might contribute to reducing the growing north-south divide. However, this may require us to be prepared to take some pretty strong medicine, given that the declared policy of most of our political parties, including those in government, is to rebalance the economy and pay down (at least some parts of) the debt, and there has been precious little progress so far.
It seems to me that this is a profoundly moral issue, but how does one say it without sounding moralising? If I can take that risk and be slightly 'theological', as that is what this blog is supposed to be impicitly or sometimes explicitly, those of us who have been reading Amos and Hosea at morning prayer over these past couple of weeks can hardly fail to have noticed the similarities between what the prophets were/are saying to Israel and Judah and the state of our nation after the almighty bender of the pre-crash years that some still refuse to believe or act as if it is over for them.
And now to the reality of all this.
Peston's prescription is that we need to reduce our debt (in all sectors), and live within our means, which before the crash we patently were not doing - as individuals, corporately and as a nation, including our balance of payments, which has been out of kilter for decades. We need to reduce the size of the City, which is too big for the overall size of our economy and diverts too much money into unproductive rent-seeking (i.e making money from money for its own sake) and instead using banks for what they are supposed to be for, which is to invest in productive industries that produce real goods and services that people need. This would also have the effect of moving talented people into more useful jobs at more sensible salaries, also for the benefit of the wider economy and might contribute to reducing the growing north-south divide. However, this may require us to be prepared to take some pretty strong medicine, given that the declared policy of most of our political parties, including those in government, is to rebalance the economy and pay down (at least some parts of) the debt, and there has been precious little progress so far.
It seems to me that this is a profoundly moral issue, but how does one say it without sounding moralising? If I can take that risk and be slightly 'theological', as that is what this blog is supposed to be impicitly or sometimes explicitly, those of us who have been reading Amos and Hosea at morning prayer over these past couple of weeks can hardly fail to have noticed the similarities between what the prophets were/are saying to Israel and Judah and the state of our nation after the almighty bender of the pre-crash years that some still refuse to believe or act as if it is over for them.
And now to the reality of all this.
Unemployment
The claimant count in Worcestershire in December 2012
decreased by 260 to 9,854, and was 875 lower than December 2011. This is 2.8% of the 16-64 population, which
remains below the regional and national levels.
The number of claimants is now at its lowest level since December 2008;
however this number is expected to rise slightly next month when the January
figures are released due to the decrease in seasonal work. The greatest decrease in absolute terms
(between December 2011 and December 2012) took place in Redditch and Worcester
with a fall of 257 and 295 claimants respectively.
The district with the highest proportion of claimants
aged 16-64 was Wyre Forest (3.6%). The
urban centre with the highest proportion of claimants aged 16-64 is
Kidderminster with 4.2% and the lowest is Wythall at 1.6%. In Worcestershire's urban areas the
proportion of claimants aged 16-64 is 3.2%, which is 0.4% higher than the
county as a whole.
Long Term
Unemployment
The proportion of claimants who have been in receipt of
JSA benefit between 6 and 12 months hasdecreased by 6.0 % to 15.1% since December 2011 whilst those claiming for more than 12 months have increased by 6.9 percentage points over the same period to 22.4% of all claimants. The number of people claiming for 6-12 months has declined due to them either finding employment or falling into the category of claiming for more than 12 months.
Unemployment by
Gender
During the recession the male claimant count rate
increased at a faster pace than the female rate. Post-recession the male rate
began to fall again, although not back to pre-recession levels, whilst the female rate has remained at the higher level.
Unemployment by
Occupation
The claimant count is not broken down by industry, but
using data by occupation does give us anindirect indication of the industries involved. In terms of overall numbers the greatest decrease in claimants compared to December 2011 has been in Elementary occupations (180) and Administrative and Secretarial Occupations (175). In percentage terms, the largest decrease was in Professional occupations (28.4%).
Claimants Leaving
the Unemployment Count
2,605 people left the claimant count in December 2012, of
those people 49.1% have found employment and a further 38.4% are either 'not
known' or have 'failed to sign'; it is possible that some of these people have
also found employment.
Youth Unemployment
– Claimants Aged 18-24
In December 2012 the number of claimants aged 18-24 was
2,690 which is a decrease of 185 compared to November 2012 and 555 fewer
claimants compared to December 2011. The
proportion of claimants aged 18-24 is 6.5%, 0.1% lower than the England average.
The
district with the highest proportion of claimants aged 18-24 was Wyre Forest
(8.1%) and the greatest decrease in absolute terms (between December 2011 and
December 2012) took place in Redditch with a fall of 185 claimants.
After a significant rise, the Worcestershire 18-24
claimant rate reached a peak in August 2009.
It has since fallen with some seasonal effects related to Christmas and
summer employment; however
it is yet to reach pre-recession levels. It is important to reduce the number of
18-24 year olds in unemployment, as it affects people at the very start of
their working lives. A period of unemployment at this stage increases the
likelihood of an individual becoming disengaged from the labour market and
impacting their lifetime earnings potential.
