Inner London only area of UK to return to pre-recession levels of job creation

Inner London only area of UK to return to pre-recession levels of job creation

By agency reporter
23 Jun 2014

Inner London is the only area of the country to have a higher rate of job starts than before the recession, while job creation in some parts of the country is down 31 per cent on pre-recession levels, according to a new Trades Union Congress (TUC) report published today (23 June).

The TUC Touchstone pamphlet Equitable Full Employment: A Jobs Recovery For All shows that the recent rise in employment is being driven by fewer people leaving their jobs, rather than more people finding new work.

Job starts – the number of people starting a new job within a three month period – are currently around 20 per cent below pre-recession levels across the UK, and are still falling in parts of the country. The fact that fewer people are leaving their jobs helps to explain why the employment rate for older workers is increasing so much faster than for young people, says the TUC.

The report, written for the TUC by Tony Wilson and Paul Bivand of the Centre for Economic and Social Inclusion (Inclusion), compares job start rates before the recession, at the height of the crash and during the recent recovery. It finds that metropolitan areas such as London, Birmingham and Tyne and Wear are recovering faster than their neighbouring rural areas.

Inner London is the only area of the country where jobs are being created at a faster rate than before the crash. Outer London, the South East and Eastern England have recovered since the crash but job starts are still 11 per cent, 16 per cent and 21 per cent below pre-recession levels.

Job creation across the rest of the country is more mixed, says the TUC. Job creation in Tyne and Wear is recovering (though still 11 per cent below pre-recession levels) but getting worse across the rest of the North East.

Job creation in the West Midlands metropolitan area is recovering but the rest of the region continues to decline (down 31 per cent), while South and West Yorkshire are both performing far better than the rest of Yorkshire and Humberside. Job starts in Greater Manchester have fallen slightly since the height of the crash but the city is still doing far better than Merseyside and the rest of the North West, where job starts are 30 per cent down on pre-recession levels.

Strathclyde is the only major metropolitan area that is performing worse than its neighbouring area, with job creation across the rest of Scotland recovering faster.

The report shows while the UK’s employment rate is rising, there are huge swathes of the country – particularly rural areas – where job creation remains depressed and is getting worse, say the TUC.

The report also looks at job starts across different age groups, qualification levels and types of work. It finds that while job creation rates for graduates are back above pre-recession levels, the number of people with lower-level qualifications starting new jobs declined during the boom and has continued to deteriorate since the crash.

The proportion of jobs starts to non-permanent work is now higher than it was before the crash, with three in ten job starts in temporary work. Fixed-term contacts are the most popular form of temporary work.

The TUC says that the continuing shift from permanent employee jobs to self-employment and temporary work, such as fixed-term contacts and agency work, suggests the nature of the UK jobs market is changing permanently, rather than being a short-term response to the recession.

The rate of people moving from unemployment to work is still lower than pre-recession levels across all age groups, says the report. ‘Hiring rates’ have recovered fastest for older workers, but they remain far less likely to move from unemployment to work than any other age group.

Hiring rates for 16-24 year olds, who traditionally have moved from unemployment into work at a far quicker rate than all other age groups, have declined considerably over the last 17 years. People in their late 20s and early 30s are now finding work as quickly as younger people.

The report makes a number of recommendations to boost job creation and raise employment levels further, including:

• Offering targeted employment support programmes, such as a job guarantee for any young person out of work for at least six months.
• Identifying low skills as a reason to provide more intensive employment support.
• Establishing bodies in each industrial sector so that government, unions and employers can work together to identify skills gaps, promote decent workplace standards and fair pay.

TUC General Secretary Frances O’Grady said: “Many people assume that rising employment levels are simply down to more people getting new work. In fact, the recent recovery in our jobs market is mainly due to people holding onto their jobs, rather than finding new ones. This is great news if you want to keep earning as you approach retirement, but less positive if you’re trying to take your first step on the career ladder.

“Job creation is as important for people looking for work as it is for those already in work and looking to boost their incomes. It’s worrying that across huge swathes of the country – and particularly in rural areas – job creation levels remain depressed and that where jobs are being created far more are temporary positions than before the crash.

“We need to see far more high-quality jobs being created, not just in our cities but across the UK, if we’re going to achieve full employment and a return to healthy pay rises.”

CESI Associate Director Paul Bivand said: “What we are concerned about is inclusion, which isn’t just our name. Growth in employment should help to close gaps in our society. We don’t want a rising tide to lift just the most buoyant, while leaving others behind. We want all areas and groups to benefit and we need to close gaps.

“We are already hearing that there is a risk of the Bank taking action because of overheating high-end London house prices. For the economy to benefit all, then rises in jobs have to occur in the rural areas as well as the cities, and Glasgow and Merseyside as well as the South East.”

* Equitable Full Employment: A Fair Recovery For All is available at www.tuc.org.uk/sites/default/files/Equitable_Full_Employment.pdf

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