Jobless rate is long-term problem

Sep 7 2009 by Kevin Rowan, The Journal

AS talk of recovery from recession begins to gain some momentum the discussions around resolving some of the key structural challenges in the labour elements of the economy are producing some interesting food for thought.

Certainly the recession has affected every sector. There is emerging evidence, however, that it is the lowest paid, least skilled workers who have borne the brunt of job losses.

It seems always the case that those least able to cope are the ones upon which the heaviest burden falls.

While there appears to have been some concern that professional and management grade workers have been most adversely affected in the downturn, it is, in fact, particularly retail workers who have lost jobs, unemployment in this sector growing by over 76,000. Over the year to July the unemployment rate for workers in elementary occupations has grown 3.6 points to 12.7%, while the rate for professional occupations is just 2.3%, although that has risen by 1.2 points over the same period.

Re-entry into work is also significantly affected by a worker’s relative position in the labour market.

Low-paid workers are likely to spend far longer on Job Seekers’ Allowance than other groups.

Considering JSA claimants who are unemployed for over 26 weeks, 41% of those in elementary sales jobs, 40% of those in basic process plant occupations and 40% of those in unskilled housekeeping roles have been unemployed for over six months.

JSA currently stands at just £64.30, just about 10% of average earnings, a record low for this benefit and, according to the OECD, one of the lowest rates of out-of-work benefits in the developed world.

Even for low-paid workers moving from earning wages to this desperately low income is a dramatic shock. If stuck on this level of income for a long period of time, workers face the risk of severe poverty.

It is becoming increasingly clear and of growing concern that, whether we are beginning to see signs of recovery or not, relatively high and long-term unemployment will be a feature of our economy for the short and medium term.

There are clearly tough choices ahead in relation to public finances. There is, within this debate a strong case for a clear focus on addressing the factors that ensure the most vulnerable workers stay in that insecure position.

Tackling unemployment will be a key concern of any government, tackling employment insecurity and vulnerability can help make employment more sustainable.

Kevin Rowan is Regional Secretary, Northern TUC