Jobs and the depression

A common factor in all the depressions of the last two hundred years has been factories reducing output and sometimes closing down permanently, with consequent mass unemployment. When recovery comes, total production increases to new, higher, levels but it does not follow that all the industries that have declined in the depression will share in the recovery. Some old industries go on shrinking, others disappear, and new industries take their place. This is very marked in the present depression.

Since 1979 production has fallen by over 10 per cent, a record number of companies have gone bankrupt, the number of workers in employment has fallen by two million and unemployment has grown by the same amount. But within these overall figures big changes have taken place in particular industries.

In manufacturing industry as a whole, employment fell by 1½ million between 1979 and 1982, but 600,000 jobs had already gone in the previous six years. In the “metals” (which includes steel) the total in employment fell from 518,000 in 1973 to 442,000 in 1979, and to 300,000 in 1982. Labour and Tory governments had expanded capacity for producing steel only to find that other countries (Japan was one) had increasingly met world demand. Output of crude steel in Britain, which was 27½ million tons in 1970, had fallen to 21½ million in 1979, and is now down to 13½ million tons. Further cuts are planned, both for Britain and the other EEC countries.

In motor cars the number employed dropped from 741,000 in 1979 to 541,000, and in shipbuilding from 171,000 to 138,000. Textile jobs fell by 150,000. Exceptionally among manufacturing industries, the numbers employed in the field of electronic computers, radio, radar and electronic capital goods has gone up from 143,000 in 1979 to 168,000. Looking outside the manufacturing groups, building workers in employment have gone down from 1,295,000 in 1979 to 1,037,000, though some recovery is now expected. The mining and quarrying group has, so far, not declined greatly — from 349,000 in 1979 to 326,000, but the number of jobs in the coalfields likely to disappear as uneconomic pits are closed will much exceed the jobs in new mines about to come into production. Coal output has been falling for half a century. It was 227 million tons in 1938, when miners numbered 782,000 and 125 million tons last year, with 257,000 miners.

In contrast to the productive industries, the number of workers in employment has increased between 1979 and 1982 in some “service” industries. In catering and hotels the number has gone up from 933,000 to 964,000, and in “Professional and Scientific services” (which includes education and health) from 3,763,000 to 3,768,000. The biggest increase has been in insurance, banking and finance, up from 1,261,000 to 1,326,000. The number of merchant seamen has fallen from 75,000 to 50,000, with 3,500 unemployed.

Since 1965, under an Act of the Labour Government, all workers who lose their jobs because it has ceased to exist, are entitled to statutory redundancy pay related to length of continuous employment, age and pay. Some employers pay above the statutory amounts and in some instances there are separate and more favourable arrangements, as for example a maximum of £22,500 for some dockers and £25,000 for some steel workers. It is these exceptional amounts that are noticed in the press, but figures published in the Employment Gazette (March 1982) covering 1,427,000 workers give an average statutory payment of only £1,069. The Ministry says their figures are incomplete and they do not know how many of the unemployed actually receive redundancy pay, but it is clear that most of them do qualify. The number of reported redundancies rose from 186,000 in 1979 to about 500,000 in 1980 and 1981, fell to 400,000 in 1982. and was 25,000 in January 1983. The redundancy scheme has had some unforeseen consequences. Some employers, including nationalised industries, faced with trade union opposition to proposed closures and redundancies, have gone over the heads of the unions with offers of comparatively generous redundancy pay, which the workers have accepted against union policy.

The Thatcher government has more than once announced false signs of recovery from the depression, but recently the Confederation of British Industry and some economists have reported rather more reliable indicators that sales and production have begun to increase. But if and when this upward movement grows it does not mean that unemployment will at once begin to fall. In the present depression, as in previous ones, workers have become unemployed partly through falling sales and the resulting fall in output, and partly through employers getting a larger output from the workers still in employment. The unemployment due to decline in sales and production will fall as trade recovers, but that due to increased output per worker will not be similarly affected.

Before the depression the annual average increase of output per worker was about 1¼ per cent. A writer in the Sunday Telegraph (2 April 1983) estimates that output per worker is now increasing at about 3 per cent a year, from which it follows that “the demand for labour will not increase until national output grows at that rate (3 per cent) or more”. Other information shows that many companies are confident that they can increase output substantially without at present taking on more workers. The prospect is, therefore, that when trade improves the total number of unemployed will, for some considerable time, not decline, and may even go on increasing.