Wednesday, 12 May 2010

Con/Dem Nation threatens to turn rising unemployment into a tidal wave

Just as Britain becomes a "Con/Dem Nation," unemployment has risen to the highest level since 1994.

According to the Times, "the number out of Britons out of work in the three months to March rose by 53,000 to 2.51 million — the highest number since 1994 when the last Conservative Government was in power." At the same time, "the number of people who claimed jobless benefit fell by 27,100," the contrast being "down to the “economically inactive”, which are those who are not working but are unable to claim jobless benefit because they are ill, studying or caring for family." 

Howard Archer, economist at IHS Global Insight told the Guardian;
The ongoing mixed labour market data reinforces our belief that it is premature to call the all-clear on the jobs front, despite recently improved economic activity and the overall resilience of the labour market through the economy's travails.

We suspect the labour market may well be somewhat erratic in the near term at least, with some months of unemployment gains and some of losses. In particular, significant job cuts in the public sector are looming as part of the major squeeze that has to occur on government expenditure.
James Knightley, economist at ING Financial Markets, said that the present data implies "implies weak wage growth, low inflation and ongoing loose monetary policy, especially given the scale of fiscal consolidation facing the economy." In essence, economists are using big words to describe what people could already see by looking around them - inflation is increasing faster than expected, ahead of wage rises, and only the Bank of England base rate of 0.5% is acting as a buffer against more economic disaster.

But this will be cold comfort for the many who find themselves out of a job or whose jobs are under threat. First on the line are workers at the Kraft headquarters in Cheltenham, where Unite the Union is predicting roughly five hundred job losses. Civil servants have some protection from this in the High Court ruling that the government can't force through changes to redundancy terms without union consent, but there can be little doubt that the government will still attack in the name of "the major squeeze that has to occur on government expenditure."

David Cameron and Nick Clegg have hailed this moment as a "historic and seismic shift." They're not wrong. The only question, depending on the severity of the attacks and the strength of the fightback, is who that shift favours.