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date: 15 June 2009

embargo: 00.01hrs Tuesday 16 June 2009

Unemployment to keep rising until the end of next year, says TUC

Although some economists are saying that the end of the recession may be in sight, the TUC is today (Tuesday) warning that unemployment will carry on rising for many months even after the UK economy has begun to pick up.

Using official figures and comparing the current recession to the economic downturn of the early 1990s, the TUC is predicting that the number of people losing their jobs will carry on increasing until at least the autumn of next year.

There has always been a delay between the economy starting to grow and unemployment beginning to fall, as cautious employers make use of capacity among existing staff before recruiting new employees and want to be sure of recovery before expanding their businesses. In the last recession, GDP began to grow in the autumn of 1991, but it was 18 months later before unemployment started to fall.

But this recession is already proving to be much worse than the 1990s recession. The largest quarterly fall in GDP in the 1990s was 1.2 per cent, but the decline between the last quarter of 2008 and the first quarter of 2009 was 1.9 per cent.

The biggest fall over any four consecutive quarters in the 1990s was 2.2 per cent, yet GDP fell by 4.1 per cent between early 2008 and the first quarter of this year.

During the shallower 1990s recession, unemployment rose for 11 consecutive quarters - a period of just under three years. And unemployment rates did not return to their pre-recession levels for seven years. This time around unemployment has only been rising for five consecutive quarters, suggesting we may only be half way through unemployment rising, and some years before it falls to the level before the recession started.

TUC General Secretary Brendan Barber said: 'Some now say that we have a recovery, but even if this is not a false dawn, as others fear, it will be years before the thousands of people who have lost their jobs or who will lose them in months to come will see anything to celebrate.

'That's why tackling unemployment must remain the Government's number one priority. Speeding up the process of getting people back into work and into jobs with decent pay will not only benefit the two million people currently out of work, but will also give the economy the spending boost it needs.'

NOTES TO EDITORS:

- In the 1990s, a less severe recession than the current downturn, unemployment only started to fall six quarters (18 months) after GDP had started to grow:

GDP began to grow in Q4 1991, and unemployment began to fall by Q2 1993.

Even when unemployment did start to fall it did so slowly, and remained higher than it had been at the start of the recession until Q3 1997 (in Q2 1990 the unemployment rate was 6.9 per cent, and it only fell to 6.8 per cent in Q3 1997).

- This recession is much worse than the recession of the 1990s:

Between the last quarter of 2008 and the first quarter of 2009, GDP shrunk by 1.9 per cent, in the 1990s the largest quarterly fall was 1.2 per cent.

The most recent figures show that in the first quarter of 2009 GDP was down 4.1 per cent on the same time during the previous year, but in the 1990s the largest annual fall in GDP was 2.2 per cent on the year.

- During the 1990s unemployment rose for 11 consecutive quarters (just under three years). So far in this downturn unemployment has only risen for five consecutive quarters.

- Even if we see a recovery this year, it is likely that unemployment will continue to rise until at least late 2010.

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

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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

Press release (800 words) issued 16 Jun 2009