By: Mike Campbell
When recession bites, businesses lose sales, but their overheads remain. Ultimately, there comes a point where they will have to shed the workforce to save on costs; often there is little work for employees to do since demand is down. Eventually, when the economy moves out of recession, businesses need to get enough custom (demand) before they can start re-hiring. This explains why employments statistics lag behind the recession.
Mervyn King, Governor of the Bank of England, suggested that there were signs of recovery in the UK economy, but cautioned that unemployment was set to rise in 2010. UK unemployment has risen to 2.47 million people (7.9%), the worst figures for 14 years. One in five 16 to 24 year olds is out of work.
The Organisation for Economic Co-operation and Development (OECD) have drawn much the same conclusions, At the end of 2007, unemployment across the OECD’s 30 member states was at 5.6%. By the end of this July, the level had risen to 8.5%; the highest level since World War 2. OECD believes that the recession has already cost 15 million jobs in member state countries and that a further 10 million jobs may go by the end of next year. The head of the OECD, Angel Gurria, stated that "a recovery is in sight, but it is likely to be modest for some time to come." He identified the type of worker worst affected by the global crisis: "As in previous severe economic downturns, vulnerable groups - youth, immigrants and workers in temporary or part-time jobs - are bearing most of the brunt of the job losses,"
When the job figures start to improve, we can say with some confidence that this recession is behind us – this is of little comfort now for those who have lost their jobs now.
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