A true picture of the looming joblessness crisis has yet to be painted by the Chancellor
The unemployment figures still do not reflect what is really happening in Britain’s post-Covid world
One of the first records I ever bought was by UB40 – the Birmingham-based reggae band named after the form used to claim unemployment benefit.
The hit single “One in Ten”– released in 1981, the year joblessness in the West Midlands reached 10pc – blew my 12-year-old mind. Throughout the early Eighties, amid deindustrialisation and industrial unrest, UK-wide unemployment surged, peaking at almost 12pc in 1984. The social and political fallout was huge.
Over the coming months, a similar degree of joblessness is, unfortunately, inevitable. That was the unspoken admission in Rishi Sunak’s Winter Economy Plan. “I cannot save every job,” the Chancellor told the House of Commons yesterday. But the extent to which unemployment is about to rise – and the profound impact on politics and broader society – is yet to be widely understood.
Over recent months, countless pundits have wondered aloud why, despite the UK enduring the sharpest economic contraction in three centuries, unemployment has stayed
‘In the early Eighties, amid industrial unrest, UK-wide jobless figures surged, peaking at almost 12pc’
‘Nobody knows me, but I’m always there. A statistic, a reminder in a world that doesn’t care’
low. The latest official data suggests a jobless rate of 4.1pc, just 0.3pc up on last year, before any lockdown.
These headline figures, though, are by no means the full story. They cover those “actively looking for work” – and, of course, many unemployed people aren’t, due to Covid-related restrictions. The “claimant count” measure, in contrast – those drawing some kind of unemployment-related benefit – has indeed spiked. It is now up at 2.7m, having more than doubled since March. Given a workforce of around 32m, that suggest a jobless rate already up above 8pc. And that is before the furloughing scheme is wound up at the end of this month.
I accept that, given how the benefits system has changed since the days of UB40, the “claima nt count” now includes some people still working but on low pay, receiving top-up assistance. That suggests fewer than 2.7m may actually be unemployed. Weirdly, though, the Department for Work and Pensions has told me “it’s not possible to quantify how many” receive so-called “in-work” benefits.
Consider, also, that HMRC data shows the number of employees on UK payrolls falling sharply during lockdown. And the labour force survey fine print points, in addition, to a sharp drop in self-employment. So is it entirely reasonable to suggest unemployment is already over 8pc, despite the headline numbers?
Sunak yesterday confirmed furloughing will be replaced by the Jobs Support Scheme, backing only “viable” jobs. Some expected a more “sectoral” approach, backing certain industries, but that was judged to be too difficult. Support will be offered, instead, to firms sufficiently viable to keep people in part-time work, similar to Germany’s Kurzarbeit system, adopted after the 2008 financial crisis.
Yesterday’s Downing Street photo shoot – with the Chancellor flanked by the leaders of the Trades’ Union Congress and the Confederation of British Industry – indeed seemed more German corporatism than British laissez-faire. Such industrial harmony, though, is unlikely to last very long.
Back in May, around 30pc of the UK workforce was on furlough. By midsummer, that figure was down to 11pc. But that still means, despite lockdown easing in July, some 3m workers remain on furlough. And last week’s measures – the rule of six and other restrictions – won’t improve their chances of returning to work.
Even if just one in three of these furloughed workers loses their job entirely when the scheme ends in October then unemployment will spike above 3.5m, or 11pc, similar to its mid-Eighties peak.
Sunak yesterday claimed there is no Treasury forecast for the unemployment level. I think we can conclude there is, in fact, no forecast he’s prepared to publish.
And, while this is no criticism, I cannot agree with the Chancellor when, reply to questioning in the Commons, he said unemployment could reach “high single digits by the end of the year”. That’s too optimistic. Back in July, even the Office for Budget Responsibility published a “central scenario” unemployment prediction of 12pc – assuming no second lockdown.
Mass unemployment will further convulse our politics. Expect even more venal party warfare, even more class contempt. The Bank of England will come under huge pressure to buy countless government bonds, weakening sterling. Lockdown measures become more difficult to defend and enforce.
“Nobody knows me, but I’m always there,” sang UB40. “A statistic, a reminder in a world that doesn’t care”. Expect plenty of similarly angry songs to emerge in the difficult months ahead.
UB40’s song ‘One in Ten’ encapsulated the anger at the unemployment crisis in the Eighties