UK unemployment will get worse before it gets better

Without targeted action, the UK will suffer.

Everyone knows it is tough to get a job right now. But it’s going to get worse, before it gets better. That’s the judgement of the Office for Budget Responsibility. Their latest forecast, published by George Osborne alongside the Budget, shows that unemployment will peak at 8.7 per cent and it will not fall until quarter three 2013, next September at the earliest.

The UK’s unemployment rate (8.4 per cent) is the worst for 17 years, since 1995. But the OBR’s forecast suggests that another hundred thousand more people in Britain will be without a job before the end of the summer. IPPR analysis – based on the pattern of the increase in 2011 – shows that 50,000 more men and more 50,000 women will become unemployed this year, with 100,000 public sector jobs lost and the 200,000 new jobs created in the private sector being matched by the increase in the number of people looking for work in the UK.

Young people will continue to bear the brunt of unemployment, with an extra 41,000 young people aged under 25 joining those already unemployed breaking a new record, since records began in 1992. At the other end of the age scale, an extra 7,000 people aged over 50 will become unemployed, who will find it very tough to find work again.

Overall, unemployment will not "peak" until at least September and if unemployment rises again this month, as the OBR predicts, it will be the tenth month in a row. In America, unemployment is falling and the economy growing. Last year, the US economy grew by 1.7 per cent versus 0.8 per cent in Britain. US employment grew 1.2 per cent while Britain lagged at 0.7 per cent. And US growth appears to be accelerating: it was 0.7 per cent in the final quarter of 2011 compared with a decline of 0.2 per cent for Britain.

An important reason why America is stronger is that President Obama has maintained his commitment to fiscal stimulus while the UK has focused on austerity. The biggest danger in the UK is not Greek-style default but Japanese-style stagnation. But even if the government won’t change its fiscal stance, there is something to learn from America.

The primary tool for US stimulus has been a payroll tax cut introduced in 2010 and recently extended with cross-party support through 2012. The cut reduced the rate of an employee’s contribution to social security from 6.2 to 4.2 per cent, putting $1,000 per year into families’ pockets. This has injected $92 billion a year of stimulus into the economy and US consumer spending increased by 2.2 per cent last year while it shrank by 0.8 per cent in Britain. One might think this extra spending was at the expense of debt reduction, but the reverse is true — US households have reduced debts by 11 per cent since the bubble burst as against only 5 per cent for Britain.

This combination of increasing consumption and reducing debt is the key to recovery. Businesses in Britain and around the world are sitting on record piles of cash: $2 trillion globally. But they won’t invest that cash and create jobs until they see the demand for their products and services rising. And squeezed consumers won’t create that demand until they have confidence they can spend a bit more and manage their debts.

This has been the longest recession and the slowest recovery that Britain has ever experienced. The personal tragedy of the slow economic recovery is the way unemployment will continue to rise, even once the economy begins to grow. The risk is that high unemployment becomes a permanent feature of the UK economy, as it did in the 1980s. Even within the context of the Government’s deficit reduction plan, it is short-sighted of the not to do more to get people back into jobs.

People queue outside a jobcentre at the height of the recession. Credit: Getty

Richard Darlington is Head of News at IPPR. Follow him on Twitter @RDarlo.

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Labour is a pioneer in fighting sexism. That doesn't mean there's no sexism in Labour

While we campaign against misogyny, we must not fall into the trap of thinking Labour is above it; doing so lets women members down and puts the party in danger of not taking them seriously when they report incidents. 

I’m in the Labour party to fight for equality. I cheered when Labour announced that one of its three Budget tests was ensuring the burden of cuts didn’t fall on women. I celebrated the party’s record of winning rights for women on International Women’s Day. And I marched with Labour women to end male violence against women and girls.

I’m proud of the work we’re doing for women across the country. But, as the Labour party fights for me to feel safer in society, I still feel unsafe in the Labour party.

These problems are not unique to the Labour party; misogyny is everywhere in politics. You just have to look on Twitter to see women MPs – and any woman who speaks out – receiving rape and death threats. Women at political events are subject to threatening behaviour and sexual harassment. Sexism and violence against women at its heart is about power and control. And, as we all know, nowhere is power more highly-prized and sought-after than in politics.

While we campaign against misogyny, we must not fall into the trap of thinking Labour is above it; doing so lets women members down and puts the party in danger of not taking them seriously when they report incidents. 

The House of Commons’ women and equalities committee recently stated that political parties should have robust procedures in place to prevent intimidation, bullying or sexual harassment. The committee looked at this thanks to the work of Gavin Shuker, who has helped in taking up this issue since we first started highlighting it. Labour should follow this advice, put its values into action and change its structures and culture if we are to make our party safe for women.

We need thorough and enforced codes of conduct: online, offline and at all levels of the party, from branches to the parliamentary Labour party. These should be made clear to everyone upon joining, include reminders at the start of meetings and be up in every campaign office in the country.

Too many members – particularly new and young members – say they don’t know how to report incidents or what will happen if they do. This information should be given to all members, made easily available on the website and circulated to all local parties.

Too many people – including MPs and local party leaders – still say they wouldn’t know what to do if a local member told them they had been sexually harassed. All staff members and people in positions of responsibility should be given training, so they can support members and feel comfortable responding to issues.

Having a third party organisation or individual to deal with complaints of this nature would be a huge help too. Their contact details should be easy to find on the website. This organisation should, crucially, be independent of influence from elsewhere in the party. This would allow them to perform their role without political pressures or bias. We need a system that gives members confidence that they will be treated fairly, not one where members are worried about reporting incidents because the man in question holds power, has certain political allies or is a friend or colleague of the person you are supposed to complain to.

Giving this third party the resources and access they need to identify issues within our party and recommend further changes to the NEC would help to begin a continuous process of improving both our structures and culture.

Labour should champion a more open culture, where people feel able to report incidents and don't have to worry about ruining their career or facing political repercussions if they do so. Problems should not be brushed under the carpet. It takes bravery to admit your faults. But, until these problems are faced head-on, they will not go away.

Being the party of equality does not mean Labour is immune to misogyny and sexual harassment, but it does mean it should lead the way on tackling it.

Now is the time for Labour to practice what it preaches and prove it is serious about women’s equality.

Bex Bailey was on Labour’s national executive committee from 2014 to 2016.