Britain's real jobless total 'more than 3m' says new report

Manufacturing 'badly hit' in industrial heartlands, creating a widening north-south divide in the labour market

• Larry Elliott
• The Observer, Sunday 18 October 2009
• Article history

Rapidly rising unemployment in Britain's industrial heartlands has sent the real level of joblessness surging to well over 3m during the recession, according to a report to be published this week.

Urging a package of help for dole queue blackspots, the study shows that widespread lay-offs in the manufacturing sector have widened the north-south divide in the labour market.

Professor Steve Fothergill, author of the report for the Industrial Communities Alliance, said the real level of unemployment was close to 3.4m, more than double the 1.6m claimant count total once those ineligible for benefits and the hidden unemployed on incapacity benefits were taken into account.

"There are two disturbing things about this report," Fothergill said. "It underlines the extent to which the old industrial areas were quite a distance from full employment even before the recession started. But since the recession began, there has been a big jump in joblessness in the old industrial areas, which in many places is in excess of 10% of the workforce."

Scotland, Wales, the West Midlands and the north bore the brunt of job cuts in the 1980s, when most of Britain's mines were closed and large numbers of factories shut down. Despite attempts to create new jobs through retail parks and call centres, Fothergill said the traditional manufacturing heartlands had still lagged behind the richer parts of the UK in terms of employment when the downturn began 18 months ago.

The study found hopes in the industrial regions that the financial crisis would leave manufacturing relatively unscathed had been dashed. Factory output has dropped by more than 13% since the recession began in early 2008, more than double the 6% drop in economic output overall.

"Once more, manufacturing has been badly hit, and as a result the greatest job losses have often been in Britain's older industrial areas where manufacturing is a key component of the local economy," the study said. "In effect, the current recession has been hitting many of the same areas that bore the brunt of the recessions in the 1980s and 1990s, and it is some of the least well-off people that have again been worst affected."

The study said that its 3.4m jobless calculation was arrived at by taking the 1.6m on the claimant count and adding 900,000 people classified as jobless under the government's alternative unemployment measure and a similar number of people hidden on incapacity benefits. It is calling for a five-point programme:

■ a rebalancing of the economy in favour of manufacturing;

■ a selective short-time working subsidy to keep jobs and capacity intact;

■ more support for the workless, including training for older workers;

■ a bigger role for local government in economic regeneration;

■ a new priority for job creation.

The report said the list of the top 20 districts for unemployment was "like a roll call of Britain's industrial heartlands". None is south of a line from the Wash to the Severn. Although the government's claimant count measure of unemployment puts the jobless rate at 5%, the report said it was three times higher in many industrial districts. Blaenau Gwent, Wolverhampton, Knowsley and Stoke-on-Trent have more than 15% of the workforce jobless.

Unemployment increases had been particularly acute in the West Midlands, which remained heavily reliant on manufacturing. But the study found every part of England with a high concentration of industry had suffered from the fall in demand while in Scotland and Wales, the picture was more mixed.