UK Recession - What Happened to Redundancies?

Here’s a great chart from our Economics bloggers which is really useful in helping students researching the recent recession in the UK…

The chart illustrates what has happened to the monthly number of redundancies repored to the Office of National Statistics in the UK.

Download Chart of Monthly UK Redundancies (pdf)

Even in a booming economy, there will always be a level of redundancies as firms fail, restructure, relocate and so on. Looking at the chart, the normal level of monthly redundancies in the 2-3 years running up the credit crunch seems to have been around 100-150k. During 2007 monthly redundancies even seemed to fall - evidence that very few firms had much of an inkling about the scale of the economic downturn that was about to occur.

The sharp increase in redundancies from the middle of 2008 provides a graphic illustration of how quickly UK firms responded to cut capacity and costs once the nature of the downturn became clearer.

But what has happened during 2009 is, perhaps, even more interesting.

During the second half of 2009, monthly redundancies have fallen sharply, almost returning to the normal level. A sign of increasing confidence amongst businesses that the worst is behind us? Another reason could be the more flexible nature of the UK workforce - firms have increasingly opted to use part-time working, job sharing, extended factory holidays and other measures - rather than opt for cutting staff costs through redundancy.

Certainly unemployment seems to have peaked substantially below the dire predictions that were being made for the UK economy at the start of 2009.