Comment on todayís Budget and labour market statistics

Commenting on todayís budget, presented by Chancellor Alastair Darling, David Coats, associate director – policy – at The Work Foundation, said:

ëThe Chancellorís budget fell short of the sizable stimulus that the economic crisis demands and what is affordable. Overall levels of indebtedness remain below many of our international competitors while, according to the government, growth is expected to return towards the end of the year.

ëHowever, the chancellor has recognised the need for decisive action to protect jobs and help the unemployed – in particular unemployed young people. The 1.7 billion for Job Centre Plus to help with the extra numbers claiming benefits is sensible and the job guarantee aimed at the under 25s out of work for a year is very welcome. The new youth training programme, money for new places at sixth form colleges, the flexible new deal for the long-term unemployed, and 250,000 jobs in deprived areas offer a well-targeted political response.

ëThe balance between supporting mature industries that are struggling (through the car scrappage scheme, for example) and boosting green employment and fledgling industries is the right one. We also welcome the change to a 50 per cent tax rate for top earners. Over recent years, too much wealth has been diverted into the pockets of those who already have plenty - leading to grave doubts about the fairness of how the economic cake is carved up. It is right in principle that those who can pay more tax should do so.í

Commenting on todayís labour market statistics, Ian Brinkley, associate director at The Work Foundation, said:


ëJob losses are gathering pace as we move deeper into the recession – and worse is to come. Unemployment on the preferred International Labour Organisation definition (looked for work in last 4 weeks and able to start a job in 2 weeks time) went up by nearly 180,000 taking the total to 2.1 million or 6.7 per cent of the labour force.

ëLooking at what has been happening over the past year it is impossible to draw the conclusion that this is a ëmiddle classí recession. The people most affected are not professionals and managers, but unskilled, semi-skilled and administrative workers in manufacturing, construction, hospitality, distribution and business service jobs. There are pockets of high unemployment across the country, but in the main it is cities and locations across the north, north east, midlands, Wales and Scotland where the recession is biting the hardest and most jobs are being shed.

ëThe figures show the service sector falling almost as fast as manufacturing. These job losses are mostly in retailing and hospitality and some business services, rather than in the finance sector. The public sector remains relatively unaffected – for now - dependent as it is on previous spending decisions working through the system. Young people aged between 18 and 24 are bearing a disproportionate share of the job losses, as employers stop hiring and lay off the least experienced and least expensive people. This situation could well get worse in the summer as the new crop of graduates enter a labour market devoid of the opportunities of a few years ago.í