The flipside of this diminished productivity is much less unemployment than one would expect with this sort of slump
And now for something completely different – a glimmer of good economic news. Not about British output, of course, which – even without being strangled by euro-membership – is falling away at the same rate as Italy’s. But the deep double dip comes with one heartening twist, confirmed in new figures on Wednesday: it now requires many more of us to labour away to churn out the reduced volume of stuff.
Put that way, it doesn’t sound too cheery, but the flipside of this diminished productivity is much less unemployment than one would expect with this sort of slump. Over the same second quarter during which GDP caused such dismay by shirking by 0.7%, 200,000 extra people ended up in work. This mismatch flies in the face of all historical experience. Back in the 80s, jobs remained sorely scarce even after modest growth had returned. After the great slump of the 30s output recovered faster than today, and yet – at this stage of the cycle – joblessness remained chronic and the Jarrow march was still ahead.
There are all sorts of questions about the types of jobs involved. As compared to the bubble years, there are very many more temporary contracts and also a million extra unwilling part-timers, so a good slice of the workforce is insecure and underemployed. Neither figure, however, has moved by that much very recently; certainly not by enough to explain away a generally rosy picture, in which full-time posts are also up. Other statistical stones can be turned in the hunt for a hidden nasty, but they do not yield anything much. Measured by benefit claims, the length of the dole queue is stable; look at the “inactive” workers who are sick or discouraged as opposed to unemployed proper, and the picture actually improves. The most serious remaining question is what happens in the event of eurogedden; the answer could be very ugly indeed. And even if the continent steps back from the brink, the rosy picture could yet darken.
For the moment, however, the labour market really is working very differently – and better – than a generation ago. Unemployment remains too high, but much more of the pain is being meted out in stagnant wages for the majority, as opposed to being concentrated in redundancy notices for the unlucky few. Instead of going back to the black stuff, Britain is spreading the grey stuff far and wide.
Hard as the times are, this is excellent news in social terms – the dole leads to worse doldrums than even a serious squeeze on pay. But what about politically? It is often said that divide and rule worked in the 30s and 80s because, despite unemployment, most people held on to their jobs. But with gentle pain for the many, as opposed to acute pain for the few, the coalition might find that austerity proves a trickier electoral sell this time around.