Recession report 15 January 2010 (2) - Social Impacts of unemployment

Recession Report 15

January 2010

Now that the UK has moved out of recession, next month's edition will be our final Recession Report. From March, we will however be producing a short monthly Labour Market Report, and a bi-monthly Economic Report.

Part One: Key statistics

The latest labour market figures cover the period September to November 2009, and show that:

• 2,458,000 people were unemployed by the ILO measure. This is:
• - down 33,000 since last month's release (which covered August - October);
• - down7,000 on the quarter;
• - and up 511,000 on the year.
• Almost all of the reduction is a consequence of falling male unemployment (a fall of 31,000 on the month and 20,000 on the quarter) rather than female unemployment (a fall of 2,000 on the month and a rise of 13,000 on the quarter)
• The unemployment rate is now 7.8 per cent, up 1.6 percentage points on the year, the same as the last quarter and down 0.1 points on the previous month's release (which covered August - October).
• The male unemployment rate is 8.9 per cent (up 2.1 points on the year and down 0.1 on the quarter) while the female rate is 6.6 per cent (up 1.1 points on the year and up 0.1 on the quarter).
• The claimant count data are for December. They show that 1,606,500 were claiming JSA, a fall of 15,200 from November. This is the second consecutive month that the claimant count has fallen.
• There were 28,921,000 people in work. This is:
• - 5,000 less than the previous month;
• - an reduction of 14,000 on the quarter;
• - and a drop of 451,000 on the year.
• This reduction in employment demonstrates the volatility in the monthly data, which last month showed a quarterly increase of 53,000. While sharp falls, such as those we saw in late 2008, are now likely to be behind us, the future of employment growth is uncertain.
• However, October was the fourth consecutive month in which female employment increased while male employment continued to fall. Between September - October female employment rose by 18,000, while male employment fell by 24,000. On the quarter, male employment fell 55,000 and female employment rose 41,000. As with last month, all of the growth in employment was in part-time jobs, full-time work continued to fall for both women (49,000 on the quarter) and men (64,000 on the quarter), while the levels of part-time work increased (by 9,000 for men and 90,000 for women).
• The working age employment rate was 72.4 per cent, down 1.7 points on the year and down 0.1 on the quarter. The male working age employment rate was 75.3 per cent, down 0.4 points on the quarter and 2.7 points on the year. The female working age rate was 69.3 per cent, up 0.1 points on the quarter and down 0.7 points on the year.
• The working age economic inactivity rate was 21.2 per cent (up 0.2 point on the quarter) and levels of economic inactivity rose, as with last month due to an increase in the number of students. On the year, the number of people economically inactive because of study has increased by 218,000. During the same period there was a small reduction of 17,000 in the number of people looking after a home or family and a reduction of 13,000 in the number who were long-term sick. There were small increases in the numbers who were temporarily sick (13,000) or discouraged from seeking work (28,000).
• However, 2,308,000 people of working age who are economically inactive now want a job, 29 per cent of the entire group. This number has risen significantly on the year, by 217,000. However, it is not possible to disaggregate the number by whether or not these people are students.
• While the headline labour market indicators are more positive than had been expected, there is little sign of a sustained recovery in employment. A further concern is rising long-term unemployment, with 631,000 people currently having been out of work for over 12 months. It also seems likely that recovery will be slowest for those facing the greatest disadvantage - for example recent analysis by IPPR found that unemployment among black young people is now 48 per cent and that mixed ethnic groups have seen the greatest overall increases in their unemployment rates since the start of the downturn.[1]

Vacancies and new jobs

• Vacancy data show signs of labour market improvement. The October to December period saw a 3.7 per cent quarterly increase in vacancy levels, with vacancy levels now having been on the increase since the August to October rolling quarter. There is some variation by sector with fairly sharp upturns in vacancies in distribution, hotels and restaurants and a slower recovery in finance and business services. Construction vacancies continue to show slow decline while manufacturing and transport and are now broadly stable but not showing significant growth. While vacancies started to fall later in the public than in the private sector, there has been a clear reduction in available public sector positions, with possible signs of a recent leveling out - although future vacancies will be strongly affected by public spending decisions. These trends can be seen in the following chart.

Vacancies by industry (thousands), June 2001- November 2009

• 
  

Where new jobs are being created, this is happening in both the public and private sectors. Between June-September private sector employment grew for the first time since the first quarter of 2008, with a quarterly increase of 29,000. The public sector also saw a quarterly rise in employment of 23,000, mainly a result of new jobs in the NHS and other areas of health and social work. In September 2009 Private sector employment accounted for 78.9 per cent of jobs in the economy, which is the lowest level since the second quarter of 1994. Considering that this period was around two and half years after the 1990s recession ended, and that the current downturn has been seen far steeper falls in GDP than its predecessor, this suggests that private sector employment has been affected far less in this recession than it has been previously.

Headline figures tell us that the public sector has seen annual employment growth of 290,000, but this is a result of the 'creation' of 196,000 new positions in publicly owned financial corporations (i.e. staff of Royal Bank of Scotland Group, Northern Rock and Lloyds Banking Group). When these workers are excluded, public sector employment has increased by a more limited 105,000 on the year, with 64,000 of these positions being created in the NHS. As the following chart shows, across most other areas of the public sector employment levels have been broadly stable during the downturn.

Public sector employment by industry, Q1 1999 - Q3 2009

The impact of Government policy

During January the first statistics were published on the Government's 'six-month offer' to unemployed people claiming JSA. This is an enhanced offer to adults (including young people, although the offer is distinct from the Young Person's Guarantee) allowing businesses employing unemployed people to access a £2,500 (£1,000 and up to £1,500 in training costs) 'golden hello' recruitment subsidy, more support to people who want to become self-employed, access to 75,000 new work-focused training packages and the opportunity for unemployed people to undertake work-focused volunteering.

Data have been published on take up of all elements apart from the training (about which further information will be available in February 2010). They show that between April - October 2009:

• 15,530 people used the recruitment subsidy
• 5,310 people took up the self-employment credit
• 4,710 people took up a volunteering placement
• No targets were announced for take-up of any
• of these interventions, however these levels of access do seem low: on average, during months for which the offer has been available there has been 320,567 people claiming JSA for between 6-12 months (the group at whom the offer is targeted) - although actual numbers will be far higher as a result of significant numbers of new claimants entering the group, and of others leaving it. This means that even by a very generous measure, take up rates for any of options on offer have been a maximum of 8 per cent, and have probably been significantly lower.
• However, there is evidence that Jobcentre Plus services are making a real different to claimant unemployment levels. The level of 'on-flow' to JSA (the number of new claims in the month) has now fallen to the lowest level since October 2008 (during December there were approximately 289,331 new claims) and during December around 16 per cent of claimants moved off JSA. This compares favorably with similar periods during previous downturns - for example in December 1991 (two months after the economy returned to growth) only 8 per cent of claimants moved off unemployment benefit.
• There are multiple reasons for higher off-flow rates during this recession, including increased conditionality in the benefits system and reduced eligibility for contribution based benefits (which in the 1990s could be claimed for 12 months of unemployment rather than six). It's also important to note that not all people moving off benefit move into work and that destinations are unknown for a large proportion of claimants.[2] Nevertheless, when the unknowns are excluded from the analysis, data suggest that around 73 per cent leave JSA to enter work or to increase their hours of work over the 16-hour JSA threshold, and 9 per cent leave to participate in Government training or another scheme.[3] The scale of the difference in off-flows between now and the 1990s recession (comparable data are not available for the 1980s), therefore suggests that Jobcentre Plus interventions, and the far wider range of services and support available to jobseekers now (including the Future Jobs Fund for young people, about which we will report as data become available), are making a difference.

Pay

There was much media attention on earnings data this month, with several national newspapers reporting a large gap between public and private sector earnings.[4] This analysis was partly flawed as it was based on statistics for public sector pay which included the nationalised banks: once 'financial services' are removed from the figures, the difference in earnings growth is reduced.

Nevertheless it is true that public sector earnings have been growing faster than those in much of the private sector during the recession. But the picture isn't as simple as many have been implying. The chart below shows average weekly earnings in the public and private sectors since January 2000.[5]

Average weekly earnings (total pay) public (excluding financial services) and private sectors, Jan 2000 - November 2009

This is a simple measure, as it doesn't disaggregate between different parts of the private sector (for example the large peaks and troughs in the private sector series are a consequence of changes in bonus packages for bankers), or different occupations in either sector (for example, there are proportionally more professionals in the public sector, which affects earnings figures[6]) but it does show us that broadly speaking earnings growth and levels for before the recession were often higher in the private sector (for example, in February 2008 average weekly earnings (total pay) in the private sector were £463, compared to £431 in the public sector - over five times the current gap between sectors), and that over the longer term private sector earnings are likely to pick up. Since 1999, the average annual increase in total pay in the public sector has been 3.5 per cent, compared to 3.97 per cent in the private sector.

Throughout the recession there has also been much discussion of widespread pay freezes. However, Incomes Data Services' most recent Pay Report[7] includes analysis of pay settlements reached during 2009. It found that of all the settlements monitored in 2009, three fifths were worth 2 per cent or more. While almost a third of settlements were pay freezes, three fifths of these in the manufacturing sector. Across the economy the median 2009 settlement was 2 per cent.

With both political parties committed to low public sector wage settlements in future years, it looks likely that private sector wages will soon once again be growing faster than those of public sector workers.

Part Two: The social impacts of unemployment

In last month's Recession Report, we looked at the effects of unemployment on unemployed people's health. This month we look at the other effects, including poverty, crime and the impact on the families of unemployed people.

Poverty

Unemployment is a major risk factor for poverty. If we use the Government's definition of poverty,[8] then working age people who live in workless households are more than twice as likely to be poor as those in households where some of the adults are in work. They in turn are more than three times as likely to be poor as those in households where all the adults are in work:[9]

Proportion of working age adults who are poor, by economic status of household,[10] UK, 2007-8

	Number in that type of household (millions)	Proportion who are poor (%)
All adults in work	22.3	6
At least one adult in work, but not all	9.3	21
Workless households	4.4	55
Total/average	35.9	15

There are different reasons for worklessness: caring or disability, for instance. If we look at the economic status of families,[11] we can see that adults in workless families have a greater risk of poverty than those in any other families and that those in families where one or more people are unemployed have a greater risk of poverty than those in other workless families:

Proportion of working age adults who are poor, by economic status of family, UK, 2007-8

	Number in that type of family (millions)	Proportion who are poor (%)
One or more full-time self-employed	3.9	18
Single/couple all in full-time work	12.6	2
Couple, one full-time, one part-time work	5.3	3
Couple, one full-time work, one not working	4.4	14
No full-time, one or more in part-time work	3.4	27
Workless, one or more aged 60 or over	0.9	37
Workless, one or more unemployed	1.2	64
Workless, other inactive	4.1	43
Total/average	35.9	15

64% of the working age adults in families where one or more of the adults are unemployed are poor. This is a very high proportion, as we can see if we compare it with other groups with high risks of poverty:

• Council tenants - 41%
• Pakistani and Bangladeshi - 50%
• One or more disabled adult, plus one or more disabled child - 30%
• People with no qualifications - 32%
• Children of lone parents (all types of economic status) - 36%

Unemployment has implications for the Government's objective of ending child poverty, as children in workless families are far more likely to be poor:[12]

Proportion of children who are poor, by economic status and family type, UK, 2007-8

	Number in that type of family (millions)	Proportion who are poor (%)
Lone parents:	3.1	36
In full-time work	0.7	10
In part-time work	0.9	22
Not working	1.6	55
Couples with children:	9.8	18
Self-employed	1.6	23
Both in full-time work	1.7	2
One in full-time work, one in part-time work	2.9	4
One in full-time work, one not working	2.3	18
One or more in part-time work	0.6	54
Both not in work	0.8	68
Total/average	12.8	23

In measuring child poverty, the government also uses a measure of 'low income and material deprivation',[13] and again unemployed people's children are more likely to be deprived than any other group:

Proportion of children who live in families facing low income and material deprivation, by economic status and family type, UK, 2007-8

	Proportion who are deprived (%)
Lone parents:	37
In full-time work	7
In part-time work	21
Not working	58
Couples with children:	11
Self-employed	7
Both in full-time work	1
One in full-time work, one in part-time work	2
One in full-time work, one not working	13
One or more in part-time work	31
Both not in work	51
Average	23

It is too early to study the impact of long-term unemployment in the current recession, but previous research strongly suggests that unemployment grinds away at a family's resources. Case study research[14] into unemployed families during the 1980s recession found that nearly all the families had had a lower standard of living in unemployment than when they had been employed and many 'described what they saw as a continuing decline, at least for the first two or three years of unemployment, until they hit 'rock bottom.'' Debt was a major problem for families in long-term unemployment, and more and more important as resources were used up: savings, loans, sale of goods, help from family and friends.

The Office of Population Censuses and Surveys carried out a major study of Living Standards During Unemployment (OPCS),[15] also during the 80s recession in the UK. Based on interviews with 3000 families, OPCS looked at their position when they entered unemployment and compared this with the position of those who were still unemployed 15 months later. They found that most unemployed families saw their living standards deteriorate rapidly:

• The proportion of houses in good repair dropped from 54% to 44%;
• Families ate a third less meat and 40% ate less fruit;
• 60% of families ate out less often; and
• Families substantially reduced their stocks of clothing.

A survey of long-term unemployment in 1980-1 carried out by the Policy Studies Institute found that long-term unemployed people incur debts to pay for necessities:

Those borrowing money during unemployment

	Men	Women
To pay heating/fuel bills	30%	22%
Own/spouse's clothes/shoes	22%	42%
Food	21%	19%

29% of those with children borrowed money to pay for their children's clothes or shoes compared with 13% who did so to pay for their own clothes or shoes.[16]

Homelessness, evictions and repossessions

So far there has been very little evidence of an increase in homelessness due to the current recession. In fact, the local authority statistics show a substantial reduction in both the number of households accepted as homeless and in the proportion of households thus being accepted. This continues a trend that has been noticeable for some time:

Number of households accepted as homeless by local authorities and acceptance rate per 1,000 households, England, 2000/1 - 2008/9[17]

	Number	Rate
2000/01	114,670	5.7
2001/02	116,660	5.7
2002/03	128,540	6.2
2003/04	135,430	6.5
2004/05	120,860	5.7
2005/06	93,980	4.5
2006/07	73,360	3.5
2007/08	63,170	3.0
2008/09	53,430	2.5

There may be some homelessness that is not being picked up by these statistics, or that they reflect the impact of local authority targets to reduce the numbers of people formally accepted as homeless. In October, the Association of Directors of Adult Social Services reported that nearly 40% of their members had reported higher levels of homelessness and use of temporary accommodation in the year to September, with 85% indicating that levels had increased in the previous 6 months.[18]

In 2008 there was a substantial increase in the number of repossessions, rising to 40,000 from 26,200 in 2007; as a proportion of all mortgages this was an increase from 0.22% to 0.34%.[19] To what extent is this linked to rising unemployment? On the one hand, there has been a strong association between repossessions and previous recessions; on the other, the latest figures continue a trend that began in 2004, well before the current recession began:

Properties taken into possession, 1969 - 2008

Although the number of repossessions and other mortgage problems has increased it is also true that these problems have not yet reached the levels seen in the 1990s recession. The Department for Communities and Local Government has pointed out that, in 1991, repossessions accounted for 0.77% of all mortgages - compared with 0.43% in 2009. In addition:[20]

• In 1992, there were 352,000 households with arrears of more than 6 months.
• - In the second quarter of 2009, this figure was 154,000.
• In 1993, 16% of mortgage holders - between 1.5 and 1.7 million - were in negative equity.
• - In the first quarter of 2009, 8% of mortgage holders - between 0.7 and 1.1 million - were in negative equity.
• In the first quarter of 1992, there were 37,000 new cases of statutory homelessness.
• - In the first quarter of 2009, there were 11,000.
• In 1991, 12% of homelessness acceptances were due to mortgage arrears.
• - In 2008 the figure was 4% and in the first quarter of 2009, 3%.

The Government believes that the extra help and advice it has put in place has made a great deal of difference; the fact that the UK entered the current recession with much lower interest rates than in the early 1990s has also helped.

Happiness

Unemployment makes unemployed people unhappy. Andrew Oswald has pointed to evidence about the higher rates of suicide and mental distress among unemployed people, such as that reported in last month's Recession Report. He also uses survey evidence showing that, when individuals are asked whether they are happy, those who are unemployed say that they are much less so. In European surveys in the 1970s and 80s, while 18.6% of all individuals said they were 'not too happy', for unemployed people this figure rose to 33.0%. In the USA, the contrast was similar, with 29.6% of unemployed people saying they were not too happy, compared with 11.5% of all individuals.[21]

In another study,[22] Blanchflower and Oswald calculated that a man who was unemployed would have to have a rise in income of about $60,000 a year to make up for the loss of happiness due to being unemployed. More recently, Oswald, Di Tella and MacCulloch used the same data show that the famous 'misery index' (the inflation rate + the unemployment rate) does reflect how people feel - happiness scores are lower when either inflation or unemployment is high - but understates the relative importance of unemployment. They found that people would trade a 1 percentage point increase in the unemployment rate for a 1.7 percentage point increase in the inflation rate.[23]

Many people who have never been unemployed imagine that if they were made redundant they would spend more time with their children, get into better physical shape, catch up with their reading and do the jobs round the house that they have never had time for. In fact, the experience of unemployment - and especially of long-term unemployment - is almost never like this. The Prince's Trust has recorded[24] how unemployment affects individuals' lives; in a survey where young unemployed people were asked about different types of response:

• 41% said they found it harder to get out of bed;
• 29% said they found it harder to leave the house;
• 28% said they exercised less;
• 25% said it caused arguments with their parents or other family;
• 22% said they lost the confidence to go to job interviews;
• 21% said they found it more difficult to speak to new people.

The Prince's Trust survey put a number of questions about emotional well-being to 130 'NEETs' - young people not in employment, education or training - and found they had worse scores than young people generally:[25]

• 39% of NEETs said they felt happy 'all' or 'most' of the time,
• - Compared with 64% of young people generally;
• 15% of NEETs said they felt happy 'rarely' or 'never',
• - Compared with 6% of all young people;
• 53% of NEETs said they felt loved 'all' or 'most' of the time,
• - Compared with 62% of young people generally;
• 15% said they felt loved 'rarely' or 'never',
• - Compared with 10% of young people generally.

Youth unemployment is particularly harmful because its impacts may continue over the rest of a person's life. Using the National Child Development Study, Bell and Blanchflower looked[26] at the impact of youth unemployment on adult outcomes two decades later. They found that people who had been unemployed in their youth had lower average life satisfaction scores, were less likely to say that they were healthy, had lower average scores for satisfaction in their current jobs and had lower wages.

The happiness of workers who still have their jobs is also affected by unemployment. A study[27] using the German Socio-Economic Panel for 1984 to 2005 found 'overwhelming evidence' that 'the prospect of being unemployed in the future is highly detrimental to current life satisfaction. Low job security for the employed and unfavourable reemployment chances of the unemployed are harmful to subjective well-being'.

Family Life

A large survey carried out in 1981-2 by the London School of Hygiene and Tropical Medicine for the DHSS found that, by the age of 2, the children of long-term unemployed parents were up to an inch shorter than the children of other parents.[28] A later study, which controlled for birth weight, father's social class and family size found a similar effect, though the reduction was smaller: 1.2 cm.[29]

A study covering England and Wales during periods of four years around the 1981, 1991, and 2001 censuses found that the death rate for children of parents classified as never having worked or long-term unemployed was 13 times that for children whose parents worked in higher managerial or professional occupations. For deaths as pedestrians, this ratio was 20.6:1, for deaths as cyclists 27.5:1, for deaths due to fires 37.7:1 and for deaths of undetermined intent 32.6:1.[30]

Primary school children whose fathers are unemployed, economically inactive or absent miss more time from school than other children.[31] Almost half of young people living with an unemployed head of household are not in employment, education or training, compared with a third where the head is economically inactive, one sixth where they are sick or disabled and one fourteenth where they are in full time work.[32]

The main source of data on educational attainment, the Youth Cohort Study, provides information about parents' occupations. Unfortunately, it does not include unemployment as a category, but the 'other/not classified' category includes a high proportion of unemployed people. If we look at 18 year-olds' highest level of qualification in 2008, this category had the lowest proportion achieving level 3 and the highest proportion below level 2:

Highest qualification achieved by 18, by parental occupation, England, 2008[33]

	Level 3 (%)	Level 2 (%)	Below Level 2 (%)
Higher professional	69	21	9
Lower professional	62	26	12
Intermediate	47	33	20
Lower supervisory	33	35	31
Routine	28	36	35
Other/not classified	26	32	41
All	47	30	23

The DSS study of 30 unemployed families during the 1980s recession reported how unemployment left the men feeling irritable, strained or depressed by the loss of their role as the breadwinner, while their wives were burdened by the stresses of impossible budgeting. Unemployment brought some couples closer together, but more felt that it had caused problems. Partly this was a matter of getting 'on top of each other' (where partners were not working) partly arguments over budgeting - a third of the couples said they had had arguments or strains in their relationships related to the shortage of money. The study interviewed the couples in 1983 and 1988; by 1988, three couples had separated and another three had serious problems; 'none of these couples felt that unemployment was the root cause of the problem, but all of them felt it had contributed.'[34]

A study looking at three and a half thousand marriages and cohabitations in 15 waves of the British Household Panel Survey found that 'any form of unemployment predicts partnership dissolution. The effect is similar when unemployment hits either a man or a woman.' Traditional views of family roles seem to play a part in this story: male unemployment lowers their partners' financial satisfaction and this accounts for 55% of the increased risk of partnership dissolution; on the other hand, financial dissatisfaction does not help explain why female unemployment is linked to relationships ending.[35]

According to Relate, the relationships charity, 25% of families say they are arguing more because of the recession and 22% of couples say they arguing more because of money worries. Two thirds of Relate Centres say that demand for their services has risen during the recession.[36] In April 2009, the RSPCA reported that the number of abandoned pets had grown by 57% in the previous year as families struggled to cope with 'the economics about owning a pet.'[37]

Crime

Sociologists, economists and epidemiologists have theorised about the causes of crime without any achieving general acceptance. One of the many controversies is whether there is a link between unemployment and levels of crime and, if there is, how strong it is. In the 1980s and 90s this was politically controversial, with the Government denying there was any link.

It seems more and more likely that the links between unemployment and crime are complicated by interactions with other factors and we have not - so far - experienced an upsurge in crime during this recession. Using the Home Office's 'Police Recorded Crime' statistics and data from the Labour Force Survey, researchers at the Cabinet Office have shown that burglary and theft grew during the recessions of the 1970s, 80s and 90s[38] and noted similar findings from the Police Federation. The Federation's research uses a model in which changes in consumption, the population of young men and property the crime rate for the previous year and projects a property crime increase of 10.9% in 2009-10 and 14.1% in 2010-11.[39]

One link between crime and unemployment is undeniable: unemployed people are more likely than other people to be the victims of crime. Unemployed people are more than twice as likely to be the victims of violent crime as employed people; only students are more at risk - which reflects the fact that young men are the group most likely to be victims:

Proportion (%) who were victims of violent crime once or more in
2008/9 by employment status[40]

>

Long-term/ temporarily sick/ ill

- Long-term/ temporarily sick/ ill

	All violence	Wounding	Assault with minor injury
In employment	3.4	0.7	0.9
Unemployed	7.6	2.6	2.2
Economically inactive	2.5	0.7	0.6
- Student	8.7	1.7	2.9
- Looking after home/ family	2.6	1.0	0.6
5.4	2.5	0.6
- Retired	0.4	0.0	0.1
- Other inactive	5.6	0.1	1.3

	Assault without injury	Robbery
In employment Unemployed Economically inactive	1.5	0.6
	2.8	1.1
	0.9	0.4
- Student	3.3	1.3
- Looking after home/ family	0.8	0.3
- Long-term/ temporarily sick/ ill	1.8	1.1
- Retired	0.2	0.1
- Other inactive	0.9	1.7

Unemployed people are also more at risk of burglary:

Proportion (%) who were victims of burglary in 2008/9 by employment status[41]

	Burglary	Burglary with entry	Attempted burglary
In employment	2.5	1.5	1.1
Unemployed	5.7	4.3	1.7
Economically inactive	2.2	1.5	0.8
- Student	6.3	4.7	1.7
- Looking after home/ family	5.8	3.5	2.4
- Long-term/ - temporarily sick/ ill	4.6	2.8	1.8
- Retired	1.2	0.8	0.4
- Other inactive	3.6	3.1	1.4

And of theft from the person:

Proportion (%) who were victims of theft from the person in 2008/9 by employment status[42]

In employment	1.4
Unemployed	2.7
Economically inactive	1.5
- Student	3.0
- Looking after home/ family	2.0
- Long-term/ temporarily sick/ ill	2.1
- Retired	1.0
- Other inactive	1.1

Unemployed people are also at greater risk of vandalism and vehicle theft.

Proportion (%) who were victims of vehicle-related theft in 2008/9 by employment status[43]

	Vehicle-related theft	Theft of vehicle	Theft from vehicle	Attempted theft
In employment	7.5	0.8	5.4	1.6
Unemployed	7.4	2.5	4.4	1.1
Economically inactive	3.7	0.4	2.6	0.8
- Student	10.1	1.7	7.2	2.1
- Looking after home/ family	7.2	0.9	5.8	0.6
- Long-term/ temporarily sick/ ill	7.4	1.0	5.2	1.5
- Retired	2.5	0.3	1.7	0.6
- Other inactive	8.9	1.3	5.9	2.2

Research using the 2004/5 British Crime Survey found that unemployed women are significantly more likely to be victims of 'intimate violence' (family or partner violence, sexual assault and stalking):[44]

• 12.1% of unemployed women aged 16 - 59 were victims, compared with
• 7.2% of economically inactive women, and
• 4.9% of those in employment.

The study also found that:

• Unemployed women were 70% more likely than employed women to have experienced non-sexual partner abuse in the previous year;[45]
• Unemployed men were 90% more likely than employed women to have experienced non-sexual partner abuse in the previous year..[46]

Of course, 'correlation is not causation' and these figures do not show that today's increase in unemployment will necessarily lead to a rise in crime, but they do add to our understanding of the experience of unemployment.

Alcohol

An important Cabinet Office survey[47] noted that, overall, alcohol consumption tends to fall in a recession (people have less money to spend on drink) but that those who become unemployed are more likely to have alcohol related problems. The authors looked at international evidence showing that unemployment is associated with a greater risk of harmful drinking:

• A Swedish study showed that the risk of hospitalisation due to an alcohol-related conditions rose for people who lost their jobs - by 22% for men and more than 44% for women.
• An American study showed that increases in the overall unemployment rate led to a higher level of binge drinking by people who had lost their jobs - and, to a lesser extent, those still in employment.
• A British study found that being unemployed for three years or more as a young adult was a significant predictor of heavy and more frequent drinking when aged 27 - 35
• Another British study,[48] using data from the National Child Development Study, found that 'unemployment may play a significant part in establishing life-long patterns of hazardous behaviour in young men'. Men who had been unemployed in the year before they were interviewed were significantly more likely to smoke, drink heavily and to have a drink problem.

Drugs

A literature search[49] for the Department of Health reported on the clustering of 'problematic forms of drug use' in disadvantaged areas, with 'a strong association between drug misuse and unemployment.' Among the research results it reported were:

• A study using the 1998 BCS found that 40% of unemployed 16 to 29 year-olds reported using drugs in the previous year, compared with a quarter of those in employment.
• A study using the 1994 and 1996 Surveys found that 44% of unemployed men had ever used a recreational drug, 27% had done so recently; among employed men, 33% had ever used a recreational drug, 11% recently. 10% of unemployed men had ever used dependency drug, 4% recently; 4% of employed men had ever used a dependency drug, 1% recently.
• A BMA report in 1997 noted that around three-quarters of drug users seeking help were unemployed.

There are particular worries about the link between drug use and unemployment among young people. A study using the 2000 British Crime Survey found that, among young people, drug use is higher for those who are unemployed:

Percentage of respondents aged 16 - 29 using various drugs in the previous year by employment status, 2000[50]

	Cocaine	Heroin	Any drug	Class A
Employed	5	-	25	8
Unemployed	4	3	33	12
Economically inactive	4	1	22	8

The study noted that, as unemployment had fallen, the connection between unemployment and drug use had weakened; as it rises, we may see this story being wound backwards. The Prince's Trust's 2010 Youth Index found that 11% of unemployed young people responding to their online survey said that they had 'turned to drugs/alcohol.'[51]

As with other forms of crime, the direction of causation is not proved by a correlation and it is not surprising that problem drug users and addicts tend to be unemployed. The DoH report lists[52] a number of factors that might lead us to expect the relationship to run in the other direction as well:

• We know that there are strong links between unemployment and mental ill-health (see last month's Recession Report). We also know that mental health problems are associated with drug use and misuse.
• People with 'valued life commitments' - such as a job - have a reason to avoid experimenting with drugs if addiction would threaten them.
• Drug use (and especially drug-dealing) may provide an alternative way to achieve respect amongst one's peers.
• Drug dealing can provide an income; crimes originally committed to pay for drugs may also open up the possibility of an alternative career.
• Unemployment de-structures people's lives, making time 'hang heavily.' This is especially true in communities where most people do not have jobs. The need to structure one's life around obtaining the money for drugs, buying them and consume them re-creates a daily timetable.

Conclusion

Unemployment has important negative effects on poverty, happiness, family life, crime, drug and alcohol use and the prospects of the children of unemployed people. In some respects, such as homelessness, the UK is weathering this recession rather better than those of the 1980s and 1990s. Nonetheless, we can expect that the rise in unemployment will continue to cause damage: cutting back on investment is not only economically regressive, it would leave these social scars to fester for years to come.

Notes

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[1] IPPR, 20^th January 2010, Press Release, Recession leaves almost half young black people unemployed, finds ippr.

[2] Statistics on this issue are complicated by a large number of claimants for whom destinations are unknown, a group that will include both those who have moved into work but have not notified Jobcentre Plus using the appropriate forms, and those who remain unemployed but no longer consider it financially expedient to claim.

[3] In addition, 5 per cent move abroad, 5 per cent move onto another benefit, around 1 per cent leave to education and 1 per cent to prison.

[4] For example, see The Telegraph, 21^st January 2010, Record gap between public and private sector pay.

[5] The chart shows total pay, which includes bonuses but excludes arrears of pay. It is based on ONS's new earnings series, average weekly earnings (AWE), which has replaced the Annual Earnings Index (AEI) in their regular release.

[6] Analysis of the Labour Force Survey shows that workers with A-Level qualifications or above receive more in the public than in the private sector, while low paid workers receive better remuneration in public sector jobs. TUC analysis of the Labour Force Survey can be viewed in this post on the Touchstone blog: http://www.touchstoneblog.org.uk/2009/12/more-about-public-versus-priva….

[7] IDS (2010) Pay Report January 2010, Issue 1040.

[8] Living in a household with an income below 60% of the equivalised median, before housing costs (rent, mortgage payments, water rates and charges, structural insurance premiums and ground rent) are taken into account. The median is the point in the income distribution where half the population has a higher income and half has a lower.

[9] Households Below Average Income (HBAI) 1994/95-2007/08, DWP, 2009, table 5.7, downloaded from http://research.dwp.gov.uk/asd/hbai/hbai2008/chapters.asp on 24/01/2010 12:49. The Households Below Average Incomes reports are based on data from the Family Resources Survey, which interviews 25,000 UK households. The data used in this section include people who are self-employed; it would be more misleading not to include them, but there are problems with including this group because of under-reporting of income - quite a large group of self-employed people report that they have no income whatsoever, for instance.

[10] A household is 'a single person or group of people living at the same address as their only or main residence, who either share one meal a day together or share the living accommodation (i.e. living room).'Ibid, p. 178.

[11] The HBAI reports define a family as a single adult or a couple living as married or as civil partners and any dependent children.Ibid, p. 176.

[12] Ibid, table 4.5.

[13] Respondents to the survey are asked about a list of 21 child, adult and household items, weighted to give more weight to those items most families have, if they say they do not have the item they are asked if this is because they do not need it or want it and if it is because they cannot afford it. Those who have the item or do not want/need it are given a score of 0 for that item; the total score that results ranges from 0 to 100. Respondents who have a material deprivation score of 25 or more and a household income below 70 per cent of contemporary median income before housing costs are categorized as in low income and material deprivation (pp. 66 & 185).

[14] Thirty Families: their living standards in unemployment, J Ritchie, SCPR for DSS, Department of Social Security Research Report no. 1, 1990.

[15] Living standards during unemployment: a report of a survey of families headed by unemployed people - carried out by Social Survey Division of OPCS on behalf of the Department of Social Security, P Heady and M Smyth, OPCS for DSS, 1989, quoted in Against Unemployment, M White, PSI, 1991, passim.

[16] Ibid, p. 33.

[17] Statutory homelessness: Households accepted1 by local authorities as owed a main homelessness duty, 1991/92-2008/09, DCLG 'Live tables on homelessness', Table 621, downloaded 24/01/2010 14:39.

[18] 'Directors report extra demands being placed on adult social services', ADASS press release, 20 October 2009, downloaded on 25/01/2010 02:33.

[19] Repossession and repossession prevention: number of outstanding mortgages, arrears and repossessions, United Kingdom, from 1969, DCLG 'Live tables on repossession activity', Table 1300, downloaded on 24/01/2010 14:39.

[20] 'Preventing repossessions' factsheet, DCLG, 2009, downloaded on 25/01/2010 02:13.

[21] 'The Missing Piece of the Unemployment Puzzle; an inaugural lecture', A Oswald, 1997, downloaded from Prof Oswald's home page -on 22/01/2010 20:08.

[22] Well-Being Over Time in Britain and the USA, D Blanchflower and A Oswald, National Bureau of Economic Research, 2000, NBER Working Papers 7487, downloaded from Prof Oswald's homepage on 1/22/2010 8:58 PM.

[23] "Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness", with Rafael Di Tella and Robert MacCulloch, American Economic Review, March 2001, 91, 335-341, downloaded from Prof Oswald's home page -on 22/01/2010 20:15.

[24] Youth Index, Prince's Trust and YouGov, 2010, downloaded on 22/01/2010 15:50.

[25] Ibid, p. 5.

[26] Youth Unemployment: Déjà vu?, D Bell and D Blanchflower, Dartmouth College Working Paper, 2009, downloaded on 24/01/2010 15:13.

[27] Scarring or Scaring? The psychological impact of past unemployment and future unemployment risk, A Knabe and S Rätzel, Otto-von-Guericke-University Magdeburg, FEMM Working Paper No. 13/2008, p 11 downloaded on 24/01/2010 14:54.

[28] 'Current Social Factors and the Growth of Pre-School Children', P Fox and E Hoinville, Proceedings of the Nutrition Society (1984), 43:79A. - 80A.

[29] 'Father's unemployment and height of primary school children in Britain', R Rona and S Chinn, Annals of Human Biology, 1464-5033, Volume 18, Issue 5, 1991, pp. 441 -8.

[30] 'Deaths from injury in children and employment status in family: analysis of trends in class specific death rates', P Edwards, I Roberts, J Green and S Lutchmun, BMJ 2006; 333:119 (15 July).

[31] School Matters, P Mortimore et al, 1988, quoted in 'Poverty and Educational Achievement: why do children from low-income families tend to do less well at school?', A West, Benefits, vol. 15, no. 3, (2007), pp. 283 - 97.

[32] Literature Review of the Costs of Being 'Not in Education, Employment Or Training' at Age 16-18, B Coles, S Hutton, J Bradshaw, G Craig, C Godfrey and J Johnson, SPRU for DfES, 2002, p. 19, downloaded fromon 1/24/2010 11:39 PM.

[33] Youth Cohort Study & Longitudinal Study of Young People in England: The Activities and Experiences of 17 year olds: England 2008, Statistical Bulletin 01/2009, ONS and DCSF, 2009, p. 52, downloaded from on 1/25/2010 12:08 AM.

[34] Ritchie, s. 11.2 & p. vii.

[35] Unemployment and Partnership Dissolution, Morten Blekasaune, ISER Working Paper 2008-21, 2008, downloaded on 25/01/2010 00:45.

[36] Relate Press Release, September 2009, downloaded on 24/01/2010 18:20.

[37] 'Britons dump their pets as credit crunch bites', Michael Holden, Reuters Lifestyle, 27-4-09, downloaded on 24/01/2010 18:32.

[38] Learning from the Past: working together to tackle the social consequences of the recession - evidence pack, Social Exclusion Task Force, 2009, p. 21.

[39] Crime and the Economy, Police Federation, 2009, pp 3-4.

[40] Crime in England and Wales 2008/09: Volume 1 - Findings from the British Crime Survey and police recorded crime, A Walker, J Flatley, C Kershaw & D Moon (ed.s),Home Office & ONS, 2009, table 3.02, downloaded
on 22/01/2010 12:26.

[41] Ibid, table 4.01. Figures are for the employment status of the 'household reference person' - 'the member of the household in whose name the accommodation is owned or rented, or is otherwise responsible for the accommodation. Where this responsibility is joint within the household, the HRP is the person with the highest income. If incomes are equal, then the oldest person is the HRP.' (Volume 2, pp 39 - 40.)

[42] Ibid, table 3.02.

[43] Ibid, table 4.04.

[44] Domestic violence, sexual assault and stalking: findings from the 2004/05 British Crime Survey, Andrea Finney, Home Office Online Report 12/06, 2006, table A9, downloaded on 22/01/2010 14:32. The table includes a breakdown for the different categories of violence and for men, but the figures are not statistically significant; the pattern of unemployed people being more likely to suffer this form of violence holds true, however.

[45] Ibid, table A10.

[46] Ibid, table A11.

[47] Social Exclusion Task Force, p. 21.

[48] 'Unemployment, cigarette smoking, alcohol consumption and body weight in young British men',S Montgomery, D Cook, M Bartley & M Wadsworth, European Journal of Public Health, 1998 8(1): 21-27.

[49] Desk Research to Inform the Development of Communications
to Reduce Drug Use and Drug Related Harm in Socially Excluded Communities,
M Stead, G Hastings and D Eadie, COI Communications for DoH, 2002, downloaded on 22/01/2010 16:17.

[50] Drug misuse declared in 2000: results from the British Crime Survey, M Ramsay, P Baker, C Goulden, C Sharp and A Sondhi,Home Office Research Study 224,2001, table 2.10, downloaded on 22/01/2010 15:29.

[51] Op cit, fig 4, http://www.princes-trust.org.uk/pdf/Youth_Index_2010.pdf on 22/01/2010 15:50.

[52] Op cit, s. 3.2.1.