The Guardian view on looming unemployment: red alert
To say the harmful effects of unemployment last a lifetime understates the damage. A lesson from savage recessions in the early 1980s and early 1990s is that the consequences of joblessness are transmitted down the generations. Large parts of the UK still bear social and economic scars of Thatcher era deindustrialisation. Even many Conservatives who defend the macroeconomic policies concede that the absence of intervention to rehabilitate the workforce was a mistake. People who endured the hardship firsthand see it as something closer to a crime.
Rishi Sunak, the current chancellor, was not yet born when Margaret Thatcher was elected, and he would do well to study that period and its aftermath as large-scale redundancies loom once again. Figures released earlier this week show flashing red warning lights on a number of labour market indicators. There has been a 200,000 drop in the number of payroll employees since March, indicating job losses despite the government’s furlough scheme. That system is supporting 9.1 million workers. Their future is desperately uncertain. Government wage subsidies are due to end in October.
Meanwhile, high numbers of people claiming benefits, including some who are employed but not earning enough to live on, indicate ground falling away beneath the workforce. The claimant count for May was 2.8 million. Pay has fallen in real terms, as has the number of people who are self-employed. On this trajectory, the UK is heading for an epoch-defining jobs crisis, although the disaster does not have to become a prolonged tragedy. Strategic statecraft can mitigate the harm, applying the lessons of the 1980s and rejecting the doctrine of laissez-faire that eschews intervention as if it were an affront to natural law.
The Treasury will have to embrace support for existing jobs and incubate new ones. One obvious opportunity is to speed the transition to a more climate-friendly economy with “green new deal” measures. Some of this is understood in the government. It has been reported that Mr Sunak envisages a “green industrial revolution” as part of stimulus measures to sustain the wider economy. But as with much that emerges from Boris Johnson’s administration, there is no substance behind the signal. If the Treasury were serious about a project of national renewal, the groundwork would begin immediately, not with a budget in the autumn. Every month of delay increases the number of people who will suffer in a work drought.
Urgency comes faster to those who have directly experienced or witnessed the blight of mass unemployment. That perspective is underrepresented in the current generation of Conservatives, whose experience of economics is shaped by arguments over fiscal policy. There is not much institutional memory in the government of a severe jobs recession, and not enough cultural sensitivity in Tory ranks to the social consequences. There is a great danger that insufficient understanding of a dark chapter in British economic history will condemn millions to a needless repetition.