Unemployment: Welsh rarebit

Friday, August 14th, 2009 - economics, Employment, government jobs, job search, Legal, recruitment, unemployment

Unemployment: Welsh rarebit


The UK unemployment statistics were released this week, and looking through them they make grim reading.

Across the UK, 220,000 jobs were lost in June 2009, taking unemployment to 2.43 million – the highest level since the summer of 1995. Effectively, the UK lost 100,000 jobs per month from November 2008 to June 2009, with 220,000 lost in June alone – end of recession anyone? 20% of those under 25 in the UK seeking work are unemployed.

But, Wales bucked the trend for the second month in a row, by gaining 2,000 jobs. Why?

There are some structural issues around why this occurred, but there are also lessons for job seekers as to how the Welsh have bucked the current trend.

June 2009 UK Unemployment

The UK national statistics still show the signs of a lack of credit finance flowing to the business sector, with high ticket items still difficult to shift. Much as though some economic statistics point upwards, the overall picture must be that the media reported “growth” is coming off of the back of some mighty big falls. If this were a similar fall in stock market prices, the current “recovery” effect would be called a dead-cat bounce.

Construction is still hit hard, while automotive has only recovered thanks to the now so-called “cash for clunkers” scrapage scheme. Hence the stat’s for the West Midlands show the dead cat bounce effect on automotive employment. One of the issues the unions rightly raise is that once manufacturing jobs are lost, they are gone through a combination of loss of investment and skills: they are right. But as suppliers pull back or out of a market, it reduces capacity and hence secures the position of the stronger competitors. Secondly, the stock levels of the major manufacturers in all parts of the supply chain are now according to the Supply Purchasing index at historically low levels: if the top end starts selling, there will be a flow down through the chain.

Much as though the unemployment statistics are bad, there are signs that certain sectors are now at or close to the bottom. Anything which happens post the summer will hence be associated still with that lack of credit finance to the business sector, and on that point I agree totally with the position of both the Bank of England and the Conservative Party. The Bank agreed to pump in an extra £50Bn to the economy, as they can see that credit is not flowing to the business sector. But the problem as the Conservative Party point out in the UK is that the mixed messages from the Chancellor and the Bank/FSA: to lend on the one hand, and yet store more capital on the other. That’s contradictory, and hence unemployment statistics are tied wholly at present to credit flow.

Welsh rarebit

Why has Wales bucked the trend?

Firstly, structure. One third of the Welsh GDP occurs within a 25miles radius of Cardiff Bay – that area includes Bridgend and Newport, but excludes Swansea. So much like as the saying goes, if America economically sneezes the UK catches a cold; so the same goes for Cardiff’s economic relationship to the rest of Wales.

In June, Cardiff’s new St David’s2 shopping development started recruiting and training for its proposed October opening, with John Lewis taking on 600 employees alone.

Secondly, structure. Wales economy is still greatly tied to manufacturing, and specifically now as a Knocked-Down-Kit assembler of parts manufactured elsewhere, by employers who are foreign (mainly non-EU) based, attracted by the large EU grants of the past. Now that Eastern Europe is still expanding economically and cheaper in labour cost, why import to one part of Europe to export again to another part? Wales unemployment rose from 70,000 in mid-2008 to a high of 137,000 thanks to those manufacturers withdrawing to home or Eastern Europe grounds: Linde, Hotpoint, etc.

But thirdly, the key reason Wales unemployment is falling is the willingness of its trained workforce to relocate for work. I had never noticed the effect until I worked in Reading, where around one third of our local job applicants were Welsh domiciled: most not living in the South-East, but actually commuting on a daily basis. In our Bristol office, historically around 40% of our job applicants were Welsh domiciled; presently its around 55%. Simply, the Welsh are historically more prepared to relocate to where the work is.

If you are a job seeker looking for work at present, just adjust one thing today in your job search: extend your job search geography on all the job boards you are registered by 10miles. Simply, that is one gallon of petrol for the average car, or an extra 30mins total travelling time; but you will increase the geography covered by around 65% form the average 10mile job search radius – and that makes a lot of difference.

Good Luck!


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