Unemployment inflicting huge toll on UK
EVEN though the economy has now stabilised, the recession’s terrible human cost keeps on rising. Yesterday’s jobless data was horrific; younger people are being hit especially hard. Jobless numbers jumped by 281,000 to 2.38m in the three months to May, the largest quarterly rise since 1971; 7.6 per cent of the workforce is now officially deemed to be jobless, the highest since January 1997. These figures, as we all know, don’t mean that much, so look at the data another way: the share of the adult population in employment has dropped from a peak of 75 per cent in October – December 2007 to 72.9 per cent today. Equally dramatically, total hours worked in the economy dropped from 944.2m in March-May 2008 to 918.8m in March-May 2009, a drop of 2.7 per cent.
But all of these figures, as shocking as they are, actually downplay the real extent of the problem. Official statistics on all adults on out-of-work benefits show that no fewer than 5.2m UK residents are jobless. If you don’t believe me, do check out http://83.244.183.180/100pc/wa/ccstatgp/ctolddur/a_carate_r_ccstatgp_c_ctolddur_aug08.html and you are in for a very nasty shock. This includes those officially classified as unemployed as well as those on disability benefits, and many other categories of jobless folk. Between 1m and 1.5m of these are probably incapable of working because of a genuine debilitating disability or because they must care for sick relatives. The data also shows that 2.35m people have been on out-of-work benefits for five years or more. Irritatingly, the most recent figures on that measure are 10 months old. Updating them with some of the more recent jobless stats, we would probably get a total of 5.5m people on out of work benefits. Stripping out the 1.5m or so who couldn’t work even if they were offered a job leaves real unemployment of at least 4m. This is a great scandal. It is easy, when one works in London, to forget that even at the bubble’s peak vast numbers of people were excluded from the prosperity visible all around them. The current poor jobs figures are therefore nothing new – but, if anything, this makes them even more unbearable.
CHINA TROUBLES
One of the things that were meant to change after the credit crunch was the huge global imbalances between West and East. We consume too much and save too little and Asian nations save too much and consume too little.
News that China’s foreign exchange reserves have reached a staggering $2.132 trillion confirms that not enough has changed. Most of the reserves are still being held in greenbacks and US government bonds, artificially depressing yields and propping up the dollar. But while total reserves were up another $178bn in the second quarter alone, not all of this increase was caused by the trade surplus, which was the original driver of the global imbalances. Much of the rise was caused by an influx of speculative foreign capital, which is bound to renew pressure for a revaluation of the yen. Part of the problem is that China appears to be in the grips of a bubble again: the money supply is surging uncontrollably, for example. Until China sorts out its macroeconomic policy – and that means, among other things, ditching communism properly – it will remain a key source of instability for the rest of us.