Lies, dam lies – and March 2009 unemployment data

Monday, March 16th, 2009 - Article, credit crunch, economics, Employment, redundancy, unemployment


Unemployment Data

Not Hiring
Creative Commons License photo credit: Editor B

I didn’t write a Sunday Thoughts this week, as two news worthy lines were still developing, both of which I want to comment on at some point:

  • Foreign workers – which we will save for later
  • Unemployment data – which we will address now, but with a slightly more matured perspective

There is no doubt that unemployment is rising; and if economic patterns follow there is not a lot of doubt it will rise further – 3million seems about the mark, and up to 3.2million. Plus being honest here, it could rise higher – no one knows how far it will go.

But let’s take the data right now, and cut it back.

It seems there is too much spin going on to be able to make out what is going on, and hence national level scaremongering. I saw an excellent piece on the Evan Davis “The Bottom Line” last week, where by the three business panellists agreed that confidence was a key issue for defining the economic bottom. But it seems that another agenda is on the rise, and I am not sure that negative agenda is good – but it is well timed.

I wrote a Sunday Thoughts this year, where I suggested that if you were looking for employment, that you avoided high-ticket items that normally needed a loan to access – things like houses, cars, boats, etc. The problem then was – and still is – that the banks still are not lending, even at good levels to good businesses. This means that anything that needs more than the limit on your existing overdraft or credit card spend just won’t be bought . Hence why we see drops in housing, construction, and car sales. This is also why these sectors and those industries associated with supplying them are still taking the brunt of the unemployment so far.

Now what has happened in the Thatcher and post Thatcher years is that manufacturing has learnt its lessons, and modernised and consolidated to be globally competitive. No longer thanks to Japanese led levels of efficiency and productivity do we have numerous small suppliers scattered all over the country – they are all within an hours truck drive of the main assembly plant. This has resulted in effective regionalisation of manufacturing industries – the West Midlands is still home to the car, and it extends southwards as far as the Oxford plant with BMWMini. But no longer does it go further north than Leyland in Lancashire, or Sunderland for Nissan. And all the suppliers are now communal, so often the same two/three suppliers service the same needs of different factories.

We should be very, very proud of your car industry. Having let the Japanese steal, replica and then destroy our motorcycle industry in the 1960’s, we stole the idea back¬† and ended up with Europe’s most productive car factory – Sunderland, you should be so proud.

But much as though the old economic saying goes, when America sneezes Europe catches a cold, so now as the car industry sees levels of sales it has not seen since the 1970’s, the regional employment data reflects these new integrated supply chains. And much as though the car industry has effected the Midlands, the destruction of the finance industry has wrecked havoc on London, and the consolidation of plants and offices wrecked havoc on those areas which provided regional grant aid in the past 20 years, including my own home in South Wales.

The distinct sales and economic down turn has resulted in a distinct and pronounced upturn in unemployment. But much as though national data shows 2million plus unemployed, that is still being kept within defined industries – and as those industries are regional, those regions.

The BBC report today says that the TUC says the worst areas are:

  • The Isle of Wight – 60 jobseekers per advertised vacancy
  • Scotland’s Western Isles, 44
  • Blaenau Gwent, 42
  • Rhondda, Cynon, Taff, 36
  • London borough of Hackney, 36
  • London borough of Lewisham, 34

None of these “top” areas have a history of high employment, even when unemployment was technically low. They also suffer from communal problems – low education levels, poor housing, poor transport and resultant low wages. Pretty much all the things that the country voted Labour to power in 1997 to solve.

Changes in these areas are going to take much, much longer than 12 years: that is only half a generation, and it will take at least one to solve these problems. But Blaenau Gwent and Rhondda, Cynon, Taff have both become havens for both low-cost manufacturing and regionalised kit-built production centres. When a downturn came, and the bosses in a foreign land came to choose relatively expensive/low educated Wales over lower cost/higher educated Eastern Europe, I wonder which they choose?

So are there more job seekers than jobs at present? Yes – by about 1.5 to 1 according to JobCentre statistics and those from the Office of National Statistics. And it is that data and its likely rise that the economists are working with, not the alternate data which makes it in to the headlines thanks to – the Unions and the TUC.

I have no problem with the TUC highlighting such data, but why are they not fighting and pressing on the data that would save jobs? Like helping Lord Madelson secure the supposed ¬£2000 grant for every new car? Like “doing an Obama” and securing Gordon Brown’s already announced monies for revamping the schools in, say: the Isle of Wight, the Westerm Isles, or two London boroughs?

My conclusion is that it depends on your view of the recovery, and in that I agree with the TUC: it’s not likely to be this year, and resultantly the election is not likely to be won by Labour. That means the TUC have both a perfect economic storm in which to further their agenda, and a definitive time scale in which it will end – Spring to Autumn 2010

There is a thought that you don’t fight the fights you need to fight, but those that you can win. I wish the TUC would learn a lesson from the focused Lord Mandelson, and fight the fights that would make a difference to the people they represent. Scaremongering over unemployment statistics won’t put one job seeker back to work.

Good Luck!

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