Unemployment figures out yesterday show the claimant count rose by 36,500 last month, the biggest increase since December 1992, to total 980,900. Many economists, predicting the total would hit 2.5m in 2010, were expecting worse. Most people lucky enough to still have a job are naturally asking: will I be next?
Of course, if you work for a bank, the answer may well be 'yes'. The south-east, which has benefited most from the recent financial services boom, will be hard hit by the downturn. But it would be wrong to assume that those working in manufacturing, who took such a heavy hit in the recession of the 1980s and particularly in the north, will fare a great deal better this time around. According to yesterday's data, in the three months to June manufacturers shed 10,000 jobs more than in the previous quarter. In the past two years, manufacturers – who now employ about 3.1m people – have axed jobs in every quarter except one. In June, 1.5% fewer people were employed by our manufacturers compared to the year before, almost twice the rate that the construction sector (itself in a dire state) is cutting jobs. There are almost one quarter fewer vacancies for manufacturing jobs compared to last year. The chances of a resurgent manufacturing sector taking up the slack in the economy created by an emasculated financial sector look slim indeed.
Other data bears this out. On Monday, the CBI reported that small and medium sized manufacturers were cutting jobs for the first time in 18 months. While it's true that the recent fall in commodity prices and weakening of the pound are good for manufacturers, it makes no difference if no one at home or abroad wants to buy what they make.
Some unions have a slightly rose-tinged vision that sacked investment bankers will retrain as engineers or work in the energy industry. There's more than a bit of political ideology – and morality – in this. What better way for a humbled banker to seek redemption for helping to wreck the economy than by rolling his sleeves up and making British manufacturing great again?
It's a nice idea. But the glory days of manufacturing in this country are long gone. Manufacturers are cutting jobs just as fast, if not faster than everyone else. The UK's prize industrial companies, like our utility companies and car makers, were bought by foreign companies a long time ago. This makes our manufacturing industry more vulnerable. When times get tough, as they are now, it will be easier for a foreign company to shut down the factory of its UK subsidiary than one at home. And car makers in Britain, for example, aren't lucky enough to be able to count on government intervention, unlike those in Europe or the US. So unemployment is not just hitting the City and financial services, it seems. It's grim up north and grim down south. In fact, it's grim everywhere.