Cuts mean unemployment is here to stay

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date: 9 September 2010

embargo: 00.01hrs 10 September 2010

It is likely to take 14 years for the private sector to create enough jobs to return employment levels to those before the recession struck, according to a new TUC analysis published today (Friday).

If the private sector continues to create jobs at the same rate that it has over the last ten years it will take more than two decades in some regions to make up for the jobs lost in the recession and those to come from public spending cuts.

The TUC analysis shows that more than a million and a quarter (1,351,000) private sector jobs have been lost since the official figures for workforce jobs peaked at over 31 million in the second quarter of 2008. With a 10 per cut in public sector employment to come according to the Office for Budget Responsibility (OBR), around 2.2 million private sector jobs will need to be created to get the labour market back to pre-recession levels, says the TUC.

The analysis calculates that as private sector employment growth has averaged 0.7 per cent a year over the last decade it could take up to 14 years to generate 2.2 million private sector jobs and far longer in some regions of the UK.

At this rate it could take Yorkshire and the Humber and the North West up to 24 years to return to pre-recession job levels. The West Midlands has seen no private sector employment growth over the last decade and it is therefore impossible to predict when, if ever, unemployment will fall significantly in the region.

The analysis compares job losses between industrial sectors and finds that mining and quarrying has had the biggest proportion fall in employment - losing 15 per cent of its workforce since the second quarter of 2008 - followed by manufacturing (-12 per cent) and construction (-11 per cent).

Retail jobs - the biggest sector with 4,660,000 jobs in the first quarter of 2010 - have fallen by seven per cent since peaking at 5,040,000 at the start of 2008. The East and South East of England have experienced the sharpest fall in retail jobs - both down by 9.5 per cent - causing job losses in two of the most resilient regional labour markets since the recession started.

The sharp fall in the number of jobs would be even greater were it not for increases in the number of health, social care and education jobs.

The TUC warns that with deep spending cuts to be announced this Autumn set to cause heavy job losses, the number of workforce jobs could fall below 30 million for the first time since the start of 2003. This would mean it will take more than a decade to return to the number of jobs seen in 2008.

At Congress starting on Monday 13 September in Manchester, the TUC will launch a campaign to make the Government think again about its economic policies. The TUC will call on unions, users of public services and all those worried about the future of our economy to join a campaign for a fairer economic strategy that has its growth and jobs as its top priorities.

TUC General Secretary Brendan Barber said: 'We can all be grateful that unemployment did not rise as high as many feared during the recession, but that does not mean we should forget that more than a million people lost their jobs.

'We may now be out of recession but this has yet to work through to any significant job creation.

'When the spending cuts start to bite and public sector job losses begin in earnest the Government tells us that the private sector can make up the difference. But there are already many people who have lost private sector jobs chasing every vacancy.

'And of course spending cuts will cause further private sector job losses, not just because the state will buy fewer goods and services, but those who lose their jobs will stop spending too. Even if the private sector does better than in the past, the spending cuts will condemn us to high unemployment for the foreseeable future.'

NOTES TO EDITORS:

- Growth needed in private sector to return jobs levels to pre-recession regional peaks

Region

10 per cent cut in public sector jobs (000s)

Lost private sector jobs (000s)

Private sector jobs growth over last 10 years (%)

Employment growth needed to replace lost jobs (%)

Years to return to pre-recession jobs peak at pre-recession jobs growth rates

North West

95

190

5

12

24

Yorkshire and the Humber

72

137

5

12

24

East Midlands

59

145

6

13

22

West Midlands

71

179

0

13

-

East

72

79

13

7

5

London

105

199

10

8

8

South East

112

222

10

11

11

South West

74

131

10

11

11

Wales

41

15

10

6

6

Northern Ireland

27

43

22

12

5

Scotland

72

170

6

14

23

UK

842

1351

7

10

14

- The analysis assumes that 10 per cent of public sector jobs are cut, and that private sector jobs grow at the same rates as they did in the 10 years prior to their pre-recession peaks.

- The analysis is based on a regional breakdown of ONS data on Workforce Jobs (a series that provides estimates for the number of jobs in the UK economy). ONS regional data on public sector employment has not been used as it is not available as a historical series. Instead, the analysis assumes that jobs classified as public admin, education, health and social work are in the public sector, and that all others are private sector positions.

- Workforce Jobs estimates are consistently higher than other ONS survey estimates. The Review of Employment and Jobs Statistics cites the inclusion of foreign workers who come to the UK for less than a year, armed workers who live on bases, workers living in NHS accommodation and student halls of residents, and workers with more than two jobs as key factors for these higher estimates. The 10 per cent cut and loss of 842,000 public sector positions in the TUC analysis is therefore a lower proportional cut than is being estimated by the OBR, which believes that public sector employment will fall by 610,000 by 2015/16, a cut of 11 per cent from current general Government employment. www.statistics.gov.uk/elmr/03_08/downloads/ELMR_Mar08_Machin.pdf

- The full data for the TUC analysis is available at www.tuc.org.uk/extras/workforcejobsSeptember2010.xls

- All TUC press releases can be found at www.tuc.org.uk

- Register for the TUC's press extranet: a service exclusive to journalists wanting to access pre-embargo releases and reports from the TUC. Visit www.tuc.org.uk/pressextranet

- Congress 2010 will be held at the Manchester Central Convention Complex from Monday
13 September to Thursday 16 September. Free media passes are no longer being issued. Media credentials now cost £50 and can be collected in Manchester. If you would like a media pass, please visit www.tuc.org.uk/congress/tuc-18063-f0.cfm and return the form.

Contacts:

Media enquiries:
Liz Chinchen T: 020 7467 1248 M: 07778 158175 E: media@tuc.org.uk
Rob Holdsworth T: 020 7467 1372 M: 07717 531150 E: rholdsworth@tuc.org.uk
Elly Gibson T: 020 7467 1337 M: 07900 910624 E: egibson@tuc.org.uk

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