Bad news on the jobless front – and far worse to come in 2011

2010 drew to an end with a surge in joblessness – particularly high among young people – inflation outstripping ordinary earnings, and cuts and tax increases around the corner in the New Year

by Bernard Purcell
Thursday, December 16th, 2010

2010 drew to an end with a surge in joblessness – particularly high among young people – inflation outstripping ordinary earnings, and cuts and tax increases around the corner in the New Year. The Government was briefly put on the defensive as news emerged that Cabinet Secretary Gus O’Donnell has privately advised ministers to draw up a Plan B if its plans to increase VAT, taxes, and take £20 billion out
of public spending do not revitalise the economy.

The rise to back above the 2.5 million mark (nearly 8 per cent) – when a modest drop was expected – heightened fears that although the Government insists its own statistics show the economy has “turned the corner” and emerged “out of the danger zone” – a jobless recovery is imminent.

The number of young people among long-term unemployed is set to double next year, according to the Department of Work and Pensions own figures.

The spike in unemployment included 33,000 job losses mainly in the public sector in the north-east, south-west and east of England. The Government’s own projections are for a further 330,000 job losses in the public sector in the next four years which, it says, will be replaced by the private sector.

But accountants warn that many private sector firms are facing too much uncertainty in the real economy to increase their workforces or payrolls.

The Centre for Economics and Business Research’s managing economist said many businesses are still too cautious to aggressively expand payrolls ahead of a year in which the VAT rise and soaring commodity prices will squeeze households further.

The Chartered Management Institute, which represents the country’s managers, said its members are hamstrung by skill shortages, low morale, poor leadership, lack of manpower and expect wide ranging redundancies next year in both the public and private sectors. Middle managers had been squeezed to do more with less, the CMI complained.

TUC general secretary Brendan Barber said inflation is already running higher than wages – the Retail Price Index which includes mortgages is at 4.7 per cent while the Consumer Price Index ended the year at 3.3 per cent significantly above the Bank of England’s target rate of 2 per cent – and that “the last thing the country needs” is the 2.5 per cent VAT hike on January 4.

Accountants group KPMG predicted that many manufacturers and retailers will use the January 4 VAT hike to disguise price rises.

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About The Author

Bernard Purcell is Tribune's Chief Reporter
  • http://trevselbow.blogspot.com/ Red Trev

    We can only hope that this latest crisis of capitalism will,finally prove to be terminal.We need a determined Socialist policy from Labour since,when this illegal Junta ends,the nation shall need rebuilding.2011 may just be the year when the wheels finally fall of Capital,please God,let it be.

  • swatantra

    Money may make the world go round but its not the be all and end all. There are things far more important than money and perhaps the next 2 years will show the policies of the Coalition collapse into a heap and people thrown out of their jobs and homes. Its unlikely that the private sector will absorb the vast masses of unemployed. The cutbacks will lead to a reduction in services and the very fabric of society may well fall apart and civil disorder on the streets.

  • terence patrick hewett

    The correspondent swatantra is very likely to be perfectly correct in his prediction. The same thing happened after the Agricultural Revolution and after the Industrial Revolution:The development of the transistor by Bardeen/Brattain, at AT&T Bell Labs in 1947 and the mass production of the integrated circuit, wrought changes in society that dwarfed any of those achieved by political philosophy. The invention the World Wide Web by Tim Berners-Lee in 1989 has ensured a barely controlled dialogue between millions and has changed the world forever. The essentially Luddite attitude of many in the British trade union movement creates the impression that technological advance can be resisted; it can’t, and it is a cruel deception to say that it can. The false reality of non-job creation will always, in the end, be engulfed by a tsunami of technological change. The National Trades Union Congress (NTUC) of Singapore acknowledges this reality and have adopted, in its own words, “a cooperative, rather than a confrontational policy towards employers.” They know better than us that if we are to survive we need to embrace the future, not bury our heads in the past; in the sad, sad world of a Tolpuddle Martyrs theme park. And these are the things that Brendan Barber dare not tell you.

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