Page last updated at 08:43 GMT, Thursday, 26 February 2009

What can be done to help the jobless?

By Jacqui Farnham
BBC Money Programme

Looking for work form
Searching for work can be difficult and depressing

Figures released earlier this month show that unemployment is lurching towards a staggering two million. What can be done to help the UK's jobless find work?

The number of vacancies in the UK has fallen by 76,000 in the last three months.

Some employers are cutting up to 75% of their staff. As many as 600 applicants are fighting over some jobs.

Every day new headlines bring more bad news of job cuts and shrinking businesses and this recession has hit every sector of the economy.

Banking to blame

The problem started with the banks.

It is a bit like telling somebody about a death in the family
Architect George Ferguson

When the infamous credit crunch hit, the banks began to fail and inevitably, job losses followed.

Since August 2007, more than 150,000 people have been made redundant from the finance industry.

Whilst sympathy may be in short supply for some ex-bankers, there is a big question over what the jobless City worker can do.

Given how many people are now fighting over so few City jobs, some are considering a change of career.

And teaching is proving a popular option.

Applications for teacher training are up nearly 11% on last year, according to figures for the last six months released by the Training and Development Agency for Schools (TDA).

"We're seeing an unprecedented and sustained rise in enquiries about teaching," says a delighted Graham Holley, chief executive of the TDA.

"Over 1,000 people have visited our 'City seminars' for those in the financial sector considering teaching."

This recession may prove to be a boon for the teaching industry but the collapse of banking has set off a domino effect which has clattered through the whole economy.

Building industry demolished

As trouble brewed in the banks, the construction industry also came under intense pressure.

At one end of the building scale, fewer home owners are adding extensions and loft conversions.

Man entering a job centre
Unemployment is yet again a politically hot potato

At the other end of the market, big construction projects usually funded by bank loans are being moth-balled.

Since late 2007, the capital required to fund these projects has been hard to find.

Architect George Ferguson specialises in urban regeneration, and work at his practice in Bristol has dropped off sharply.

As a result, he and his fellow directors have taken a pay cut, and they have had to make 10 out of 30 staff redundant.

Like most employers, he finds it hard to let members of his team go.

"It is a bit like telling somebody about a death in the family," Mr Ferguson says.

"I think it's important to make people feel appreciated and make them realise that it's just a matter of who is going to be appropriate for what we are doing now and what we will be doing in the future."

Manufacturing broken down

As architects and building companies feel the pinch, pressure also falls on another industry, namely manufacturing.

People spend their money when they're reliant on benefits. They're not hoarding it away
Brendan Barber of the TUC

Once the backbone of the British economy, manufacturing is now seeing its most high pressure squeeze so far, with output falling by 5% in the last quarter of 2008.

This sector of the economy is no stranger to the pain of recession.

In the 1980s, the British manufacturing industry took a major hit.

Many firms were mired in inefficiency, heavily dependent on government subsidy and prone to frequent striking.

But Margaret Thatcher changed all that.

She cut subsidies to nationalised companies, confronted the unions and instituted policies which made imported goods far cheaper than home grown products.

Companies had to raise their game, or go to the wall.

These days, UK manufacturing firms are amongst the most efficient in Europe.

A few months ago, this would have been a source of pride, but right now it is causing heavy job losses because there simply is not room for much more efficiency savings in their processes.

The fall in the value of Sterling has helped with exports, but not enough to save jobs.

Many manufacturing firms have no choice but to make widespread redundancies.

All shopped out on the High Street

And as redundancies increase and credit becomes harder to find, the domino effect claims another victim, namely retail.

Margaret Thatcher
Thatcher transformed the UK corporate sector

In this recession people from every economic level have been watching the pennies.

The impact on the High Street has been significant.

In the last three months, some 40,000 people have lost their jobs in the retail sector.

Almost 30,000 of those were made redundant by High Street icon Woolworths.

The future for the High Street may look bleak, but according to Bryan Roberts from analysts Planet Retail there are good signs from some retailers.

"The supermarkets are insulated because people need to eat," says Mr Roberts.

"Discount brands are doing well. Retailers like Primark and Aldi tend to thrive in a recession as people trade down in search of value for money."

Pay cuts and short time working

Whilst job opportunities may exist for retail workers, hundreds of thousands of jobless may be facing longer term unemployment.

Print and post your CV, do not email it
James Caan, Dragon

So what can be done to help?

Some experts say that one possible solution for cash-strapped businesses may be for some workers to take a pay cut or work fewer hours in order to cut costs.

This can mean that fewer or no job losses result.

Bristol architect, George Ferguson, took a pay cut in October last year in order to limit the number of redundancies his company would have to make.

He says it is important to keep skilled workers onboard.

"Without the proper talent and skills and experience, we're lost," says Mr Ferguson.

"As soon as we let that go, we're not able to serve our clients properly. And if we can't serve our clients properly then we haven't got a business."

Brendan Barber, general secretary of the TUC, agrees that businesses need to think about how they will deal with the upturn when it comes.

"They can struggle if they are faced with skill shortages, so holding on to their workforce can make real economic sense."

But retaining staff is only one side of the equation. New positions also have to be created and that could still be difficult long after the "green shoots" of an economic recovery begin to push through.

Job protection laws too stringent?

Some businesses claim that the laws that protect employees from unscrupulous employers are too complex and actively put them off taking on new staff.

Companies must do what brings the greatest benefit and the least costs for all concerned
Anja Schaefer

In the US, employees have fewer rights than they do in the UK.

Some say that when the upturn does come, US employers will respond more quickly than British businesses because they do not have to wade through complex laws when dealing with employees.

Ruth Lea, former head of policy at the Institute of Directors, often hears this complaint from small enterprises.

"When I talk to small businesses, one of their big problems is struggling with the employment regulations," she says.

"I have looked at these in a lot of detail and they are amazingly complex."

But Will Hutton of the Work Foundation says that the laws are not that difficult to work with.

In his opinion, they are actually quite adaptable.

"In Britain there is a flexible labour market," he says.

"It's one of the things we have built and I'm strongly in favour of it, but I wouldn't make it yet more flexible."

The dole

A few years ago, politicians may have thought they had got away from facing difficult debates like these, but now policies on unemployment are at the top of the agenda.

One of the most difficult political hot potatoes around unemployment is the level of jobseekers allowance.

At present it stands at 60.50 per week.

According to unemployed draftsman Anthony Robinson from Hull, it does not go very far.

"Once you've paid your gas, electric, water, TV, food, you've got nothing left," he says.

"You get the money and by the end of the day you've spent it paying bills."

Given that it hasn't gone up for 10 years, Mr Barber of the TUC would like to see the dole increased.

"We would like to see it raised by 15," he says.

"That would bring it into line with what's happened with earnings in the economy over the last 10 years."

And he thinks that increasing the dole could help the rest of the economy too.

"All the evidence shows that this is money that gets recycled very quickly into the rest of the economy," he says.

"People spend their money when they're reliant on benefits. They're not hoarding it away."

Whichever way our politicians look, they are faced with difficult decisions regarding the economy and unemployment.

With jobless figures predicted to rise to three million by the end of the year, they have a tough job on their hands to make their policies work.

Money Programme: James Caan's Jobs. Broadcast 1930, BBC2, Thursday 26 February 2009.

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