Magazine article Management Today

Nirvana Is Not So Unattainable

Magazine article Management Today

Nirvana Is Not So Unattainable

Article excerpt

The UK's jobless figures are about to rise, say the pessimists, and if they don't, wage inflation is bound to kick in. They could be wrong on both counts

About 15 years ago I took part in one of those residential conferences where movers and shakers, and a few others, gather to discuss the big issues. At one point, the question came up: Would we see full employment again in Britain in our lifetimes?

The movers and shakers, who included top business people, trade union general secretaries, politicians and senior civil servants, all shook their heads gravely. I, as one of the 'others', suggested tentatively that this was too gloomy a view and that when the unfavourable demographic factors unwound (babyboomers entering the workforce), the picture might be transformed.

I say this not to boast of any forecasting triumph but merely to underline the depth of gloom into which it was all too easy to fall regarding unemployment.

For a while, it looked as if my optimism would be vindicated. Between 1986 and early 1990, unemployment virtually halved to 1.6 million and talk even turned to labour shortages in the 1990s. It was not to be. The recession of 1990-92 intervened to push the jobless total up to within a whisker of three million, and the gloomy view seemed justified once more. In the first half of the 1990s, job insecurity was again in vogue.

Now, however, it is possible to be optimistic again. Although the economy skirted recession last winter, unemployment has continued to fall. There are 1.2 million claimant unemployed and the unemployment rate is 4.5%. Since full employment is reckoned by economists to occur at an unemployment rate of 2%3% (there is always some frictional - people moving between jobs - and seasonal unemployment), Britain is within sight of it. So too is the US, where the rate is a shade over 4%.

Europe, by some distance, is not - average EU unemployment is still in double figures. And Japan, which until recently had full employment, is moving away from it.

There are caveats to be applied to Britain's current condition of near full employment. On the other measure of unemployment produced by the Government, based on the Labour Force Survey, the jobless rate is more than 6%, and some argue that true unemployment, based on all those who say they would like a job, is between four million and five million. I take the latter with a sack of salt, and I have my doubts about the LFS measure. Just as many arguments can be used to say that even the lower claimant count overstates true unemployment - not least the fact that many unemployed people apparently melt away when faced with, for example, a New Deal interview. …

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