This month’s labour market statistics made for less depressing reading than they have done in a while, with the smallest increase in unemployment since March-May 2008. But although the deterioration has slowed, the direction of travel is still downwards. Long term unemployment has risen, and projections indicate that, as in previous recessions, unemployment will continue to grow long after the economy enters its technical recovery.
Some are more exposed by the current circumstances than others. Far from the early predictions of a ‘white collar’ decline, instead it is the UK’s 7.2 million low-paid, low-skilled workers at the sharp end of a flexible and global service economy who are being hit hardest.
These workers are more at risk of losing their jobs by virtue of the industries, occupations and geographic areas where they are concentrated. For those low earners who do lose their jobs, they will find it harder to re-enter the labour market due to their low skills levels: whereas nearly nine out of ten managers and senior officials find work again within 26 weeks, only three-quarters of people in elementary occupations move off the claimant count. The low earners who do hold on to their jobs are finding the recession is limiting their already slim chances of accessing training, with evidence that employers are cutting back on training budgets during the downturn.
Last week the Resolution Foundation published Closer to Crisis? where we analyse in depth how the recession is impacting on the low earning households across the UK. In this report, we argue that despite a swift response by government, further action is necessary to protect low earners during the downturn and to ensure that this recession does not entrench the already-growing gap between the rich and the poor.
Over the next 12 to 18 months, this action must focus on helping people to stay in their jobs, or at the very least, to stay as close as possible to the labour market. It must be made easier for people to combine real jobs with useful training, for example through enabling training to count towards eligibility for Working Tax Credit. Gordon Brown’s extension of existing commitments to jobs and training for young people is welcome, but measures must target non-graduates who are more at risk of being excluded for the long-term from the labour market, as well as graduates whose entry to work is being delayed.
Sustaining the economic independence of low earners will not be an easy task, given how fragile this independence is. 3.4 million low earners – a doubling in the number since 2005 – are now putting more than a quarter of their monthly income towards debt repayment. 3 million low earners now report they are worrying ‘all the time’ about their finances and over half of the group have less than £1500 in the bank.
Our report outlines a series of specific recommendations which we believe will protect low earners during the recession. But there remains a deeper set of questions which all progressives now need to embrace. How and why did low earners come to be in such a vulnerable position in the first place? What more can government do to improve the quality of low-paid work, either directly or through working with employers? How can we rebuild the ladders from entry-level jobs – ladders that have been kicked away as the labour market has ‘hollowed out’ in recent years?
