Unemployment to keep rising until the end of next year, says TUC

Although some economists are saying that the end of the recession may be in sight, the TUC is today (Tuesday) warning that unemployment will carry on rising for many months even after the UK economy has begun to pick up.

Using official figures and comparing the current recession to the economic downturn of the early 1990s, the TUC is predicting that the number of people losing their jobs will carry on increasing until at least the autumn of next year.

There has always been a delay between the economy starting to grow and unemployment beginning to fall, as cautious employers make use of capacity among existing staff before recruiting new employees and want to be sure of recovery before expanding their businesses. In the last recession, GDP began to grow in the autumn of 1991, but it was 18 months later before unemployment started to fall.

But this recession is already proving to be much worse than the 1990s recession. The largest quarterly fall in GDP in the 1990s was 1.2 per cent, but the decline between the last quarter of 2008 and the first quarter of 2009 was 1.9 per cent.

The biggest fall over any four consecutive quarters in the 1990s was 2.2 per cent, yet GDP fell by 4.1 per cent between early 2008 and the first quarter of this year.

During the shallower 1990s recession, unemployment rose for 11 consecutive quarters – a period of just under three years. And unemployment rates did not return to their pre-recession levels for seven years. This time around unemployment has only been rising for five consecutive quarters, suggesting we may only be half way through unemployment rising, and some years before it falls to the level before the recession started.

TUC General Secretary Brendan Barber said: “Some now say that we have a recovery, but even if this is not a false dawn, as others fear, it will be years before the thousands of people who have lost their jobs or who will lose them in months to come will see anything to celebrate.
“That’s why tackling unemployment must remain the Government’s number one priority. Speeding up the process of getting people back into work and into jobs with decent pay will not only benefit the two million people currently out of work, but will also give the economy the spending boost it needs.”