Growth is great but let's not get over-excited

Feb 1 2010 by Kevin Rowan, The Journal

THE economic growth reported this week, however minor, is much better news than we’ve enjoyed for some time. No one should get over excited about this latest set of figures and some will want to downplay this upturn completely.

It takes two consecutive quarters of negative growth to constitute a recession and there’s an argument to suggest we should witness two periods of positive growth before we can claim to be out of the recession.

The fact that news of growth came just a few days after the announcement that the unemployment in the region has increased by seven thousand shows how far we have to go before any upturn will start to make a meaningful difference to working people. While confidence will slowly return to employers, it will be much longer before we see significant growth in employment levels, in fact, it is likely that unemployment will continue to grow for most of this year.

The lag between economic performance and employment has worked both ways, while employment growth will be slower than economic growth, it is also the case that while the economy shrunk by six per cent (10 per cent if you include foregone economic growth) overall employment has fallen by just two per cent.

To date the commentary around the demographic impact of the recession has focused on the impact on young workers. The government, understandably anxious about presiding over another ‘lost generation’, has responded to the challenge of having one in five young workers out of work, introducing a raft of employment and skills interventions including the young person’s guarantee and Future Jobs Fund.

Recent reports from the Equalities and Human Rights Commission and Government Equalities Office show that other groups have also suffered disproportionately during the economic downturn. ILO statistics show that unemployment of white workers has increased by 2.8%, while non-white unemployment has increased by 3.3%; this must be taken in the context that pre-recession unemployment rates were already much higher for non-white workers.

Of course, ‘non-white’ is a very broad description and there is much variation within this descriptor. For example, the unemployment rate of mixed race workers has increased by 5.7% while the rate for black workers has gone up by 6.9%, with the economic inactivity rate for this group also increasing by half a point. Again, this must be considered in context, the employment rate for these groups was already between five and 10 points behind the employment rates of white workers, with gender and region also having an impact.

This evidence of a disproportionate impact of the recession indicates there is a case for a focused response. The government has acknowledged this is the case for young workers and has acted to address this. There is very clearly a case for a similar set of targeted and specific interventions for other groups of workers too.

Kevin Rowan is regional secretary of Northern TUC