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UK: Unemployment

Volume 718: debated on Monday 8 March 2010

Question

Asked by

To ask Her Majesty's Government whether more British firms have experienced job losses than their overseas counterparts; and, if so, why. [HL2332]

There is information available on the number of redundancies for the UK but not on the number of firms that have made workers redundant. Also, there is no internationally comparable information on redundancies.

In the three months to December 2009, 168,000 people had become redundant in the three months before the Labour Force Survey interviews. The level was down 36,000 from the previous quarter and compares to a peak level of 302,000 in the three months to April 2009.

Unemployment rates can provide some information on job losses but refer to individuals rather than firms. Unemployment rates are an aggregate measure of the proportion of individuals who are out of work but actively seeking employment. As such they refer to individuals within a country and do not therefore provide a measure of the extent to which firms in a country have made redundancies.

Unemployment rates are also a proxy measure of net job losses as individuals can enter unemployment from economic inactivity, such as retirement, rather than just from employment. However a rise in the unemployment rate over a relatively short period gives an impression of the number of job losses net of recruitment in that period.

A comparison of OECD harmonised unemployment rates is shown in Table 1. Data refer to the United Kingdom rather than Britain.

Table 1—OECD harmonised ILO unemployment rates (seasonally adjusted quarterly data)

2009Q4 (unless stated) %

Change on Quarter (% pt. change)

Change on Year (% pt. change)

Change on past two years (% pt. change)

Canada (Jan)

8.4

-0.1

1.9

2.5

Denmark

7.1

0.9

3.4

3.7

France

10.0

0.4

1.7

2.1

Germany

7.5

-0.1

0.4

-0.5

Italy

8.3

0.5

1.3

2.0

Japan

5.2

-0.2

1.1

1.3

Netherlands

4.0

0.3

1.3

1.1

Spain

18.9

0.2

4.9

10.3

UK (Oct/Q3)

7.8

0.1

2.0

2.5

US (Jan)

10.0

0.3

3.1

5.2

EU

9.4

0.2

1.9

2.5

G7

8.5

0.2

2.0

3.0

OECD

8.8

0.2

2.1

3.1

Source: OECD

Table 1 suggests that the UK has experienced a rise in its unemployment rate over the past quarter of similar but of a slightly lower magnitude than many other developed nations. Similarly the change in the unemployment rate over the past year is in line with the OECD and EU averages. Over the past two years the UK has had a rise in its unemployment rate lower than that for OECD countries on average and of the same magnitude as the EU average.

The reasons for differences in the changes in unemployment rates during the global recession between countries are likely to be numerous. These include but are not limited to: the national unemployment rate before recession; the change in gross domestic product; the efficacy of the welfare system; wage and price flexibility; the industrial composition of the economy; and the size of fiscal stimulus including targeted labour market policies. A combination of these and other factors has contributed to the changes in unemployment rates in Table 1. However the relative contribution of each is uncertain.