The FT above reproduces the latest ONS data on UK employment.
As can be seen the rate of redundancies is now exceeding the worst phase of 2008 - the height of the once in a century financial crash.
Worse news is that this is set to continue for at least another quarter. Whilst hopes for a vaccine roll-out in Q1 2021 mean that some shuttered business may decide to hold on and try to arise phoenix like from the ashes then, many more will not have the financial wherewithal to sustain themselves for that long.
Plus the pandemic has created a perfect Schumpeterian syndrome, where changes that were in progress for a decade or more have been smashed into a few months. There will not be much demand for building big offices or hotels in the near future for example in any big cities. Firms that have gone digital have prospered whilst analogue ones have experienced their market and demand simply dry up.
This dislocation always causes long-term unemployment. The pandemic is at least better than 2008 in that we can see much of the world of before will bounce back - air travel will resume - at a lower level and taking time to build, but it is not gone the way of Lehman Brothers and the money on securitised mortgage loans.
The ONS are forecasting unemployment to hit over 5% and possibly over 6% - in some ways, it could be worse. Quite a chunk of this should bounce back next year if we can get on top of the virus. But that does not take away from redundancy and unemployment being such a horrible fate for so many, even short periods can be very stressful and have huge long-term impact on your finances and life.
A really positive thing about the UK is the ability though of the economy, although increasingly modelled on EU stasis lines, to still have enough capitalist traits to ensure rapid job growth (sadly, increasingly of lower paid jobs). France and Spain will have a much tougher time in the medium term trying to get out of the Corona fix.
It's odd, ain't it, that The People's Party has made no fuss about the folly of lockdowns? Does it no longer believe that unemployment and the associated poverty are bad things?
ReplyDeleteWhat would Keir Hardie say?
He would ask why there are redundancies if the Furlough scheme was so "world beating"
ReplyDeleteSeems that OPM can't buy you everything.
The Labour movement wanted Magic Grandpa. The Labour Party put Starmer in charge. I wonder how Ernie Bevin would have coped with this politician-and-technocrat-inspired panic
ReplyDeleteIt all depends if Vallance, Whitty, SAGE and that blonde guy decide to keep us all locked down in one last push towards the vaccine... a dangerously distant horizon, beyond Spring according to the blonde guy *wossname ?* and won't be the "knockout blow" says he.
ReplyDeleteSorry.
This feels a lot more personal than 2008. Our towns weren't shuttered up (much of it for good) then.
Like a flick of a switch. Thriving and viable businesses and ancient pubs were dealt a lethal blow.
Certainly there will be unemployment and probably worse that 2008 to 2010. Rather than losing mere money we have lost and will have lost whole swathes of employment sectors. I think be realistic and look at a five year recovery and that to a lower base than before. Those Brexit unicorns will likely starve to death.
ReplyDeleteThe rest of Europe and the world will be 'enjoying' the same Shumpeterian changes and will all be seeking to recover as much as possible. The EU will have every reason to play hardball. We may find big international companies will take a good hard look at how they reset their plans for the next decade.
We may be able and likely will collapse wages to the point where Iphone assembly is economic. But tariff barriers will make it not worth while. Heavy car and truck assembly suffers the same problem. Services look good but everyone can play the services game, competition will be fierce. We have not put in the educational or social development hard miles. Where are all those very low wage workers going to live - no more shop doorways, so empty offices then.
Then we will be looking at a massive drop in local council revenues. Already we are hearing noises about social services being cut back even more. Sure, an insurance scheme would help - if only we had started 30 years ago. We might have been better off not saving the lives of all those oldies. Except we were obliged to toe the line and go along with our EU neighbours. Not much to laugh at at all.
Jim, a service based economy is much more resilient than a manufacturing based one. in manufacturing we have discovred the chinese can copy and cheat, but they cant change their culture to provide good service - not as yet anyway.
ReplyDeleteHence I think the Uk will do OK, the biggest challenge will be the EU if it tries to regualte the EU such that financial transaction cannot happen offshore - but as with the US even in the past trying this, this is very unlikley to succeeed.
People who are only good with their hands (and there are lots of them) won't do so well.
ReplyDelete