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Black Workers and the Recession

Issue date
A TUC Recession Report

Introduction

This Recession Report takes an early look at the impact of the recession on black and minority ethnic workers.

A year ago, the TUC published Ten Years After, marking the tenth anniversary of the Stephen Lawrence report by looking at the impact of ten years of Government policy on race equality. We found that, in employment, the Government had made some progress in closing the employment gaps, but we worried about the lack of employer engagement with the Government's efforts. Although the picture had improved with regard to employment rates, black and minority ethnic workers were still concentrated in low paid and part-time jobs, and they had difficulty in securing progression once they got jobs. 'Ten Years' After was published just before the recession began to bite, so this Recession Report is an opportunity to review some of the issues we looked at in 2008 in the light of what has happened since.

Summary

This report finds that there are good reasons for worrying that the recession may hit black and minority ethnic workers harder than other groups: that is what has happened in previous recessions. The good news is that this does not appear to have happened so far: BME unemployment did rise during the early months of the recession, but not as steeply as white unemployment. Black and minority ethnic people are still less likely than white people to be employed and more likely to be unemployed, but the employment and unemployment gaps fell a little in 2008. (It is important to remember that we still only have data for the early stages of the recession, and the picture may change as new figures are published.)

This may be connected to the fact that a large proportion of black and minority ethnic workers live in London. London entered the recession with high unemployment, but has had a net increase in the number of employees in 2008.[1] Another possible cause has been the fact that the public sector was somewhat sheltered in the early stages of the recession, and the sectors where BME employment performance has been strong have been largely in the public sector. Now that a number of public sector employers are making redundancies the picture may change radically. The case that BME workers would be especially hard hit by an attack on the public sector is very strong.

Black and Minority Ethnic People and Poverty

The background to our concerns continues to be the fact that black and minority ethnic families face a far greater risk of poverty than white families.

Proportion of children living in poverty by ethnic group, 2006/7[2]

Ethnic group

Proportion of children in poverty

White

27%

Mixed

41%

Asian or Asian British

50%

of which

Indian

32%

Pakistani/Bangladeshi

63%

Black or Black British

48%

of which

Black Caribbean

38%

Black Non-Caribbean

56%

Chinese or other ethnic group

46%

All children

30%

This is a politically important fact: all the political parties are supposedly committed to ending child poverty. These figures show that if they want to achieve this they will have to be serious about child poverty in black and minority ethnic families. The poverty gaps between white people and people from an ethnic minority are most severe for children, but they also exist for pensioners and people of working age:

Poverty rates by age and ethnicity[3]

Group

White - British

Ethnic minority

Children

26%

45%

Working age

18%

32%

Pensioners

17%

27%

1.1Unemployment is a major cause of poverty. It is true that most poor children live in families where someone has a job, but that is because there are far more such families - the risk of being poor is much higher when you are unemployed:

2.1

Risk of poverty, by economic status of adults in the family, 2006/7[4]

Economic status

Proportion of families who are poor

One or more full-time self-employed

23%

Single/couple all in full-time work

5%

Couple, one full-time, one part-time work

5%

Couple, one full-time work, one not working

25%

No full-time, one or more part-time work

30%

Workless, one or more aged 60 or over

23%

Workless, one or more unemployed

73%

Workless, other inactive

63%

3.1

If the current recession has a greater impact on black and minority ethnic workers we can expect problems of poverty, including child poverty, to become significantly worse.

Black and Minority Ethnic Workers and Recessions

There are good reasons to worry. The experience of previous recessions suggests that black and minority ethnic workers may be particularly vulnerable to rising unemployment. For the past ten years employment has been high, unemployment has been in retreat and during such periods members of black and minority ethnic groups benefit even more than whites, gaining jobs at a faster rate.

This does not mean that whites are in any way disadvantaged during the upswings of the economic cycle - their employment rates remain higher and their unemployment rates lower - but the gaps narrow between white and non-white employment and unemployment. This is is sometimes called 'hypercyclicality' - people from black and minority ethnic groups go through the same cycle of employment and unemployment as white people, but even more so.

The charts below show this happening over the course of an economic cycle. The first shows the employment rates (left hand scale) for people from an ethnic minority (unbroken line) and people generally (dashed line) between 1984 and 1997, the second does the same for unemployment rates.[5]

4.1

5.1

We can see that, as employment rises and unemployment falls, so the gaps diminish, but during the down phase of the economic cycle, it grows. During the recession of the early 1990s both gaps were large, especially the employment rate gap.

The Picture so far

Fortunately, this does not seem to have happened so far in this recession, though we should be cautious about what we can say at present. It has to be emphasised that we only have data that takes us up to the end of 2008 for a recession that started in the spring of that year. This is a recession that has a long way to go - even if growth starts to recover at the end of this year, there will be a lag of 12 months or more before this is reflected in the employment figures.

These warnings are important, but the figures so far suggest that, in the course of 2008, the employment and unemployment gaps shrank a little:[6]

White and BME employment rates and gaps, 2007 - 8

2007 4th quarter

2008 4th quarter

Change 2007/8

White employment rate

76.3%

76.1%

-0.2 points

BME employment rate

61%

61.5%

0.50 points

Gap

15.3 points

14.6 points

-0.70 points

6.1

White and BME unemployment rates and gaps, 2007-8

2007 4th quarter

2008 4th quarter

Change 2007/8

White ILO unemployment rate

4.6%

5.9%

1.30 points

BME ILO unemployment rate

10.4%

11.2%

0.80 points

Gap

5.8 points

5.3 points

-0.50 points

7.1

Note that black and minority ethnic employment is still substantially lower than white employment and black and minority ethnic unemployment is substantially higher than white unemployment, but the change so far has been in the right direction.

The Claimant Count

8.1According to the most recent figures, there are 4.1 million black and minority ethnic people of working age - 11.3 per cent of the working age population.[7] In February, there were 176,230 black and minority ethnic unemployed workers claiming Jobseeker's Allowance - 13.5 per cent of the 1.3 million JSA claimants. In other words, black and minority ethnic people are over-represented in the 'claimant count' measure of unemployment, just like other measures.

9.1

In recent years, the total claimant count and the black and minority ethnic proportion of the claimant count have moved in opposite directions. In September 2007, when there were just 720 thousand JSA claimants overall, black and minority ethnic people accounted for 19.1 per cent of them. The chart below looks at the last four years: as the claimant count (dotted line, scale on the left) has shot up, the proportion of claimants from black and minority ethnic groups (dashed line, scale on the right) has fallen.

1This does not mean that black and minority ethnic claimant count unemployment has fallen: between February 2008 and February 2009, it rose from 128,440 to 176,230, an increase of 37.2 per cent. But white claimant count unemployment rose even faster over the same period, from 613,670 to 1,129,005, an increase of 84.0 per cent.

The key point to note here is that, even after a year during which white claimant count unemployment rose more than twice as fast as black and minority ethnic claimant count unemployment, black and minority ethnic people are still over-represented on the claimant count. BME and white claimant count unemployment would have to continue their 2008 rates of growth for most of 2009 for the BME share of overall claimant count unemployment to fall to the BME share of the working age population.

The Geographical Dimension

Most black and minority ethnic live in a comparatively few towns, cities and London Boroughs. Eighty per cent of Districts, Unitary Authorities and London Boroughs have a smaller black and minority ethnic proportion of the overall population than the national average.[8] Because of this, it can be instructive to look at what has happened in the areas where black and minority ethnic people live.

In the table below, we have looked at the impact of the recession in the 25 local authorities with the largest ethnic minority populations as a proportion of the total. In the second column we give their claimant count rates in February 2008, in the third column the rates in February 2009. The final column gives the increase over that period.

The average increase in the claimant count for all 380 local authorities was 1.7 percentage points, and we have highlighted those authorities in our table where the increase was higher - just two, Birmingham and Leicester. The reason for this can be seen when one looks at the column for the February 2008 results - 21 of the 25 have been highlighted because their claimant count level was above average.

In these districts, the claimant count was already high before the recession started, but the increase in the last 12 months has not been high.

Claimant Count Rates (%), 2008 - 9

Feb 08 rate

Feb 09 rate

Increase

Barking and Dagenham

3.4

5.1

1.7

Birmingham

5.3

7.3

2.0

Brent

3.4

4.4

1.0

Camden

2.2

3.0

0.8

Croydon

2.3

3.7

1.4

Ealing

2.4

3.7

1.3

Enfield

3.0

4.3

1.3

Greenwich

3.0

4.7

1.7

Hackney

4.6

5.7

1.1

Haringey

4.1

5.4

1.3

Harrow

1.6

2.8

1.2

Hillingdon

1.8

3.1

1.3

Hounslow

1.8

3.1

1.3

Islington

3.6

4.7

1.1

Lambeth

3.7

4.8

1.1

Leicester

3.9

5.8

1.9

Lewisham

3.3

4.5

1.2

Luton

2.8

4.5

1.7

Newham

4.1

5.2

1.1

Redbridge

2.4

3.7

1.3

Slough

2.1

3.6

1.5

Southwark

3.3

4.2

0.9

Tower Hamlets

5.1

6.1

1.0

Waltham Forest

3.8

5.1

1.3

Westminster

1.9

2.5

0.6

10.1

This is largely a London phenomenon - it is noticeable that Birmingham and Leicester do not fit this pattern. In the most recent labour market statistics, London's unemployment rate, 7.9 per cent, was well above the 6.7 per cent GB average; only the West Midlands and the North East had higher rates. But London has had a low level of redundancies - in the fourth quarter of 2008 London's redundancy rate, 8 per cent, was the lowest in the country, well below the 10.4 per cent GB average. The pattern of BME unemployment in this recession may reflect the fact that London entered the recession with a very high level of unemployment, but has had a lower level of redundancies.

The Industries Where Black and Minority Ethnic Jobs Have Been Lost

During 2008 overall BME employment rose;[9] but this overall figure masks a mixed picture in different industries. In the table below, we have shown BME employment in different industries in the fourth quarter of 2007 and the 4th quarter of 2008.

BME employment by industry, 2007 -8[10]

Industry

Q4 2007

Q4 2008

Fall/increase

Manufacturing

236,186

200,997

-35,189

Financial intermediation

127,454

125,259

-2,195

Mining quarrying

10,885

8,996

-1,889

Electricity gas & water supply

10,282

13,344

3,062

Construction

47,978

55,134

7,156

Transport storage & communication

164,209

178,375

14,166

Real estate, renting & business activ.

314,174

331,086

16,912

Education

157,011

180,746

23,735

Hotels & restaurants

162,894

186,866

23,972

Other community social & personal

70,261

102,522

32,261

Public administration & defence

116,083

150,331

34,248

Wholesale retail & motor trade

334,509

373,134

38,625

Health & social work

374,392

444,857

70,465

11.1

Agriculture is not included in this table because the numbers are too small to be confident of accuracy, but they show a fall in BME employment of one third. The figures for construction reflect the fact that construction employment grew until late in 2008; it has since fallen heavily, and it is unlikely that a table taking these figures up to spring 2009 would show the same growth for this industry.

It is also noticeable that the industries showing the strongest growth include those dominated by the public sector - health, social work, public administration and education. This picture is changing rapidly - a recent survey by the Daily Telegraph found that local authorities are cutting their budgets by up to 10 per cent, with large job losses likely over the next three years.[11]

Conclusion

This final point is important. If public sector cuts accelerate, the fall in the employment and unemployment gaps could end and we would see the BME employment picture return to the pattern of previous recessions.

All workers, whatever their ethnicity, have an interest in opposing public sector cuts. Cuts would be an economically illiterate response to the recession, making threat of unemployment more severe and last longer. On top of this, black and minority ethnic workers, and all workers who care about racial equality, have an extra concern - such cuts could give an extra edge to the worst recession since the Second World War.

Notes


[1]LFS data shows that London had 3,065,746 employees in the 4th quarter of 2007 and 3,143,091 in the 4th quarter of 2008.

[2]Households Below Average Income 1994/5 - 2006/7, DWP, 2008, table 4.5. Poverty is defined here as having an income below 60% of the equivalised median after housing costs are taken into account.

[3] Taken from The Poverty Site, 'Low Income and Ethnicity', data for graph 3, http://www.poverty.org.uk/06/index.shtml on 22/04/2009 14:59

[4]Households Below Average Income 1994/5 - 2006/7, DWP, 2008, table 3.5. Poverty defined as in note 1, figures are totals for all age and ethnic groups.

[5] First chart taken from data for a presentation on "Ethnic Minority Employment Policy" by Khamani Eze of the Ethnic Minority Employment Task Force Secretariat, DWP, at a DTI workshop on Equal and the Diversity Agenda, March 2005; Eze comments, "caution should be made on comparisons before 1997, which have not been calibrated with the updated Census 2001 population data." Second chart based on data in Labour Force Survey Historical Supplement, 1984 - 1998, ONS, 1999, table 9. LFS data, Spring Quarters, GB figures, not seasonally adjusted.

[6]LFS data, downloaded from the Office for National Statistics' SuperCROSS system on 22 April 2009.

[7]4,129,900 in Summer 2008. Annual Population Survey data, accessed through the NOMIS website (www.nomisweb.co.uk) on 21 April 2009.

[8]74 of the 380 District, Unitary and Borough authorities

[9] LFS data shows that total employment for all ethnic groups was effectively unchanged, falling slightly from 25,425,283 in the 4th quarter of 2007 to 25,417,077 in the 4th quarter of 2008.

[10] LFS data, 4th quarter of 2007 and 4th quarter of 2008, downloaded from the Office for National Statistics' SuperCROSS system on 22 April 2009.

[11] Daily Telegraph, 17 April, as reported to the TUC by UNISON

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