Will the labour shake out become a jobs rout?

Now comes the reckoning as the worst financial crisis since the Great Depression feeds through to the real economy. I have produced a PowerPoint deck which brings together some of the latest survey evidence on employment together with some updated unemployment charts. I hope this might be useful if you are teaching current developments in the labour market in the days and weeks ahead.

The debate about whether there will be a recession is over, the issue is now centred on the scale and duration of the downturn. And the turning British labour market is likely to prove crucial to macroeconomic developments over the next 18-24 months. There is much coverage in the press today about the imminence of a major jobs squeeze in our much vaunted flexible labour market. The number of unemployed has been rising in each of the last eight months and is up more than 15% since the turn of the year. In a few months time we may look back on this as the tipping point for a savage hemorrhaging of jobs.

No sector is immune to what is happening - but rising unemployment is guaranteed from some of the economy’s biggest employment industries - among them:

1. Falling demand for export industries as the global economy weakens

2. Rising failure rate for small and medium sized enterprises who run out of funding from the banks

3. UK retailers are at their most pessimistic about jobs over the next 12 months than at any time since the early 1980s - pubs are closing at a record rate and hundreds of well known high street retailers are said to be exposed to a recession and persistent freezing of the credit markets

4. Job losses in construction-related businesses and other industries linked to the depressed housing market

5. Plant closures and lay-offs in the vehicle industry - both passenger cars and truck-making

6. The fall-out from the failure of leading financial service businesses and job losses from rationalization following banking and insurance mergers and takeovers.

Unemployment expectations are currently at their most pessimistic since early 1993 with much of the really bad news on jobs yet to hit the newswires.

The full UK chartroom poster set is available from here and subscribers have linked access to a regularly updated pdf file which might be useful for other macro topics as the year progresses.

Employment Survey Charts
Employment_Surveys_for_the_UK_Economy.ppt

Guardian
Signs of recession: the impact on Britain’s real economy