More Social Aspects

24th August 09 – More social aspects

In the last diary entry (21st August) certain social aspects of the economic recession were covered, notably the increase in demand for state school places. This diary item turns to the most direct social pain, namely unemployment.

Latest Government data shows that 2.4m people in the UK were out of work at the end of June 09. Vicky Redwood, economist at Capital Economics says that unemployment will continue to rise long after the economy picks up. “Partly it’s because of time lags between firms seeing the economy improving and being certain about the outlook to make the commitment to employ more staff. It’s not just enough for the economy to be expanding again. In the past it had to be growing at around 2.5% for unemployment to come down. And that could be a very long way off.” Capital Economics thinks that the number of jobless will peak at three and a quarter million in the first quarter of 2011. If this were so, it would shadow the post-war peak of 1984.

The office for National Statistics said that 18% of under 25 year olds were out of work and not in full-time education. The number of people in work fell by 271,000 in the quarter to June 09, the biggest quarterly drop since records began in 1971 (7.8% of the workforce). By a strange twist, and a favourable financial one if as is claimed a person out of work costs the exchequer £9k per year, the number of people claiming unemployment benefits is 1.56 million. This is due, it is surmised, to some three quarters of a million people simply not claiming benefits.

The non-spongers come from the ranks of those choosing to live off redundancy payments, savings or other employment benefits. Most of the non-claimers are thought to be middle-class who do not think of themselves as the sort of people who claim benefits.

As good a label as any for the prime social aspect of the credit crunch crisis might be “a white-collar recession” coupled with a “second earner recession.”