Britain: Unemployment continues to rise despite official claims

By Peter Reydt
17 February 2010

Last month, the Brown government announced that the recession was over in the UK. After six consecutive quarters of decline, the economy was back in the black. This was the longest period of recession since World War II. Millions of workers have felt the impact through growing unemployment, wage freezes and cuts, negative equity on houses and rising figures on house repossessions. But finally the UK’s economy had grown again, by 0.1 percent in the last quarter of 2009. A fall in unemployment to 2.46 million, down 7,000, was registered.

Chancellor of the Exchequer Alistair Darling said he was now sure that “We are on a path to recovery. I’m confident but I’ll always remain cautious.” Darling was not the only one who remained cautious. Economic advisors warned that the recovery is fragile and that it is possible that the figures will go into reverse. And a closer look at the details revealed that the fall in unemployment was fuelled by a rise in part-time unemployment, which grew by 99,000, reaching a record high of 7.71 million. Full-time employment actually fell by 113,000.

Former Bank of England monetary policy committee member David Blanchflower warned that unemployment could rise steeply over the next year. The Chartered Institute of Personnel Development (CIPD) has predicted a rise in unemployment this year to 2.8 million. Chief economist John Philpott said the latest job figures were a temporary blip and were explained by factors such as school leavers opting to stay at college rather than seek employment.

“We expect a further rise because employers have been hanging on to staff in the expectation of a recovery. That recovery is only muted and so they will be forced to let staff go,” he said.

Vicky Redwood, a labour market analyst at Capital Economics, argued the jobs market was likely to deteriorate rapidly and unemployment would reach 3 million. “In the short term things have improved a little. But we are quite pessimistic and think unemployment will rise quickly and steeply over the next year,” she said.

Some of the biggest manufacturing companies in the UK have announced further job cuts in January and February.

Auto manufacturers were especially hard hit in 2009 when UK car production fell 30.9 percent following the collapse of the global market. The UK’s car scrappage scheme, which has helped to dampen the impact, will end this month leading to a further fall in car production this year.

Vauxhall had already announced job cuts last November as part of General Motors’ European restructuring, which will see at least 8,300 jobs lost throughout the continent. Now the number of jobs GM will shed at its Bedfordshire van plant has increased to 369, along with another 154 from its administrative and sales departments in Britain. Van production will continue at its Luton plant, which currently employs 1,458 people.

One hundred jobs are to go at the BMW Mini plant in Swindon. Last year the company announced the transfer of 150 jobs from its Swindon Plant to Cowley in Oxford. That figure has not been reached yet. Workers have the choice to either transfer to Cowley or take “voluntary redundancy.”

At the end of January Toyota announced that it would have to cut 750 jobs in the Midlands and North Wales, around a fifth of the workforce. From August it will mothball one of its Avensis and Auris model production lines at its Burnaston plant near Derby to produce both models on a single line. There will also be cuts at Deeside, where Toyota makes its engines. Last year Toyota’s sales in the UK fell 40 percent, from 213,000 in 2008 to 127,000. In 2009 the company had already accepted 300 applications for voluntary redundancy.

This decision was made before Toyota’s recall of 437,000 hybrid vehicles, adding to its recall crisis affecting up to 8.1 million cars worldwide due to faulty floor mats and sticking throttles. How this crisis will impact on jobs is yet to be seen. Toyota currently employs 4,000 staff in the UK.

German manufacturer Bosch is set to close down its Miskin car parts factory near Cardiff, with the loss of 900 employees. Production will be phased out until final closure by the middle of 2011. A statement reported, “The Bosch Group is currently facing the worst economic downturn for many decades and has been especially hit in the automotive sector... All this has left its mark on the Bosch Group in 2009, which will show a negative operating result for the first time in sixty years.”

There will be job losses at Cadbury in the wake of the takeover by the US company Kraft Foods. The company announced it is to shed 400 jobs through the closure of its Somerdale factory in Keynsham, near Bristol. This is a u-turn by Kraft, which originally promised to keep the factory open.

Before the takeover, Cadbury was in the process of transferring production of its confectionaries from the Somerdale plant to Poland, where it had invested £100 million in new facilities. Somerdale will now close by 2011, in line with the plans already put in place by Cadbury.

The only response from the Unite trade union has been an appeal to the government to bring its influence to bear on Kraft to prevent sackings. Jack Dromey, Unite deputy general secretary, said, “The government should now act to bring together Kraft and Unite.”

Corus Steel will make a final decision on February 16 over the fate of the Teeside Cast Products (TCP) plant in Redcar. The plant is set to be mothballed, with a loss of 1,700 of its current workforce of 2,300. The plant got into trouble last year when a consortium of steel producers led by the Italian steel specialist Marcegaglia pulled out of a 10-year contract to take 78 percent of Redcar’s steel production until 2014.

Once again, the trade union’s Community and Unite did nothing to organise a fight against the closure. Instead they formed a joint Management and Trade Union Task Force. They directed the anger of Corus workers into false hopes that a buyer would be found and appeals to the government to intervene and save Corus. The workforce was told to do everything to prove that Corus was a profitable plant to attract interest into the steelworks.

Europe’s biggest defence firm BAE Systems is to cut almost 300 jobs, bringing the total loss since last year to over 2,500. Two hundred thirty jobs will be cut at its Barrow-in-Furness submarine site following a slow in the production of submarines. BAE will also shed 41 jobs at Chadderton Military Air Solutions and 16 jobs at RAF Kinloss. BAE Systems employs around 32,000 people in Britain.

The drugs company GlaxoSmithKline has announced that it will further reduce its staff. GSK currently employs 99,000 people in more than 100 countries. The company said that as part of shedding 4,000 jobs worldwide it will shrink its workforce of 1,150 at the UK research and development site in Harlow, Essex by 380.

In addition, Britain’s second largest pharmaceutical company AstraZeneca has announced a plan for a further loss of 8,000 jobs between now and 2014. Some 12,600 jobs were already lost since 2007 in a huge restructuring programme. The latest announcement means that the company will have shrunk by a quarter in seven years. Around 3,500 jobs will be cut in research and development, but it is not clear yet where the axe will fall. The majority of AstraZeneca’s workforce is in the UK, America and Sweden.

Job losses are also planned in the oil industry. Royal Dutch Shell has announced a further 1,000 jobs losses this year, on top of the 5,000 last year. The company said it would shed the jobs amongst corporate staff and workers employed in jobs like refining. US oil firm Chevron has announced that it plans to “exit from certain markets.” Fears have been raised that this will jeopardise the future of 1,400 jobs at a refinery in Pembroke in Wales, although the company has not specified where jobs will go. Further details are expected to be released in March.

In the meantime, there is evidence of a continuing crisis in the service sector. In retail, January’s performance was the weakest since 1995, due to a combination of bad weather, the rise in VAT back to 17.5 percent and economic uncertainty. Fully 12.4 percent of shops in many town centres are empty. This is three times as many as there were at the beginning of the downturn in 2007.

Some 3,714 jobs are threatened at the discount fashion retailer Ethel Austin. At the beginning of February the company went into administration for the second time in less than two years. All of its 129 stores along with those of its sister home-ware chain Au Naturale have begun closing down sales.

Another 1,500 jobs will be lost at Shop Direct, formerly Littlewoods Home Shopping and one of the UK’s largest online retailers, at its call centres in Sunderland, Burnley, and Newtown, Wales. The group blames its falling traditional phone sales on growing online retails. Last year it cut 1,000 jobs, closing down its call centre in Crosby, Merseyside.

The first major job losses amongst local authorities has also been announced. Birmingham City Council has said that it needs to cut 2,000 jobs during the next financial year in order to help make savings of up to £69 million by April 2011. Birmingham City Council is the largest local authority in the UK, employing 52,000 people.

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