Coronavirus job losses accelerate

 

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. 

Labour suggest furlough replacement and to fight the last war, again

Quite interesting to read the news out today and the predictably stupid and vain responses from MP's. 

The news I refer too is the predictions for half a million jobs ro so to go this quarter as the furlough scheme ends. Labour of course want the scheme extended and improve upon - with more free money to pretend to keep people employed and also permanent schemes to help sectors of the economy that need it, in their view.

The Government too has its kickstarter scheme and some others, but in the round is interfering a bit less and looking at the costs a bit more. 

The Government is better here, although now is probably the time to look at the benefits system in the round and move to something more on the Swiss model. In Switzerland the Government pay you for up to a year after redundancy 80% of your wages until you find a new job - very generous indeed.

In the UK this could be a lower amount but with a credit towards re-training, which is desperately needed. 

Keir Starmer's usual vacuous soundbite is to help sectors that need support like retail and airlines. How is this of any use? We will need a lot less airline capacity for many years to come and already need far fewer shops than we used to. Plus retail is unskilled work anyway, those people in retail need some skills that maybe useful to help them earn a better living, otherwise they are going to be unemployed a long time.

Quite the worst thing to do at the moment is to try to resurrect the old economy. 10 years of cultural transformation has happened in 6 months. Offices won't be the same, working from home will be more normal and online purchasing even more of a trend. Plus staycations and home improvements. These changes are schumpeterian ones, the chaos of the recession and pandemic. Really they should be embraced to channel the changes we need into progress rather than fought against like the closure of the mining pits etc a generation ago that achieved nothing. 

Both left and right now agree with analysis that it would be have been better to close the pits and try to retrain everybody with genuine new skills rather than leave them to fester in long-term unemployment. 

So maybe let's not do that again, for example technology means we need less retail workers but far more logistics workers, why not prepare the workforce for the economy now emerging rather than the one the sun has set on?

UK Unemployment at new unsustainabe low

So on the one hand, with UK unemployment dropping to 4.8% #despitebrexit, there is yet more amusing grist to our collective mill of laughing wildly at the idiotic remoaners who are spending so much time saying how stupid Liam Fox et al are; whilst being simultaneously wrong about every forecast and every prediction they have made for, er, well it starts to feel like forever...


For no real reason, here are the current unemployment rates across the EU:


Greece: 23%
Spain: 19%
Italy: 11.6%
France: 9.7%
EU: 8.3%
Germany: 4.1%


As we can see, the UK is the pure outlier here, only marginally behind Germany in the creating jobs stakes. A real basket case, though the basket in question may be more like a Harrods hamper.


There is a big however though, due to the nature of the modern economy, any unemployment rate under 5% is probably not that sustainable. It does suggest that there is strong pressure on labour.


Interestingly in the UK, we have still not seen that much upwards wage pressure, there maybe lots of reasons for this - such as illegal immigration is much higher than registered thus the jobless rate looks artificially low compared to people who really are competing for jobs.


Or the quality of jobs created is very low and thus even some wage pressure makes little difference to the overall numbers  (as compared to say, when Bankers were getting 5% pay rises on seven figure incomes in 2006, 20p an hour extra to your sprouts pickers is not so impactful at a macro level).


We need to know the answers to this as it will mean the future Government will have to consider how much immigration to allow  - undoubtedly on prima facie evidence it would appear from an economic standpoint that reducing immigration will reduce the growth capacity of the UK at this point. Of course, there is more to it than this and creating low wage jobs in the UK for people from Latvia is not really an economic model to be envied.

UK jobless at 5 year low

Some interesting thoughts though in reaction to this news:

- There are still heaps of part-time workers who cannot find full time work or don't want to.
- The massive rise in self-employment continues unabated

Both of these two measures may well herald a permanent shift in the jobs markets. People are feeling from full-time PAYE work in order to work less but potentially earn more post-tax. Self-employment certainly is more likely to result in lower taxes than PAYE, even if it also correlates with lower income.

- Overall joblessness is has dropped quite a lot in the year, about 250,000

 Surely this is very bad for Labour and their constant attacks on the economy, cost of living etc?

Finally, years and years ago I wrote that all studies show it take 7 years to get over a financial crisis and here we are , just 2 months of the seven year anniversary of Northern Wreck going under!

UK unemployment, down again

...and all due to reducing youth unemployment. Really pleasing to see this as it also means that quality jobs or not, cuts in the public sector are just about being absorbed by the private sector - so that is less taxpayer funded jobs and more taxpaying jobs instead.

The numbers are not great and the current trend shows that this rise in employment may not last into the winter and spring - still good news for now.

Especially against such a terrible background of the unending euro-crises and the US fiscal cliff...

Jobs keep rising in unrecession

Well, as usual, the economist can't explain how we can be in recession for a year but see the number of unemployed, even the number of youth unemployed, continue to drop in the UK.

Naysayers are prone to jumping on the bandwagon of its all 'self-employed' people who are not working really or part-time jobs. Of course, some of this will be true, but many of the 'self-employed' are reflecting the broader move to contract work in society - a move which has been ongoing since the end of a 'job for life' era in the private sector 20 years ago.

of course, being self-employed and managing to avoid some of those egregious NI taxes, plus pay yourself dividends too may be working out nicely for some people - certainly a whole bunch that I know have done this - anecdotal alert - but I certainly never used to see this on the scale it is now. I wonder why...must be some relationship between high taxes and people doing things to minimise tax payments - any ideas?

Plus of course the Government is for once right to trumpet that the "unforgivable" cuts to public service have led to a net creation of jobs - in fact an all time high. Who would have thought? And of course this is a double bonus, because less state spend is helped by increase tax revenue from private sector jobs.

Given the dire state of the economy in general, its is pleasing that there is one bright spot to write about occasionally!