Unemployment Highest since 1995

Very interesting article by Mike Jones on the 'Recruitment Today' website. (http://tinyurl.com/rcyc5a) showing that unemployment is the highest since 1995, that 220,000 jobs were lost in the three months to June and that the situation will get considerably worse - all of this based on either official statistics or the opinion of experts.



These figures, however, are understating the true situation as several groups are excluded or, if you prefer, not included: any unemployed person on long-term sickness is unlikely to be included in these figures as is any self-employed person who has lost their business or whose business has simply dried up. These people either can't or won't draw job seekers allowance and so are not included in the figures. Conservatively, one can probably add at least 500,000 to the official figures.

Recent reports have shown France and Germany back into growth with Japan a very recent addition to this select group. Talking to a colleague who has just returned from an extended round the world trip it appears that China and India never went into recession, they just became concerned when growth dropped into single figures. There are signs of recovery in the US but it is still officially in recession. So, what about the UK? Some optimists predict that we will enter growth by the end of this year or, at latest, in the first quarter 2010; pessimists add a year to this.

But, where is this growth coming from and why, therefore, is it still predicted that unemployment will grow? The reason - at least to this simple observer - is that there is no prospect of growth in any area that will generate significant jobs. And, if the UK's economy does start to grow, each man, woman and child is saddled by massive debt, and the government in power will have no option other than to increase taxes (direct and indirect) with a simultaneous cut in public expenditure and neither of these is likely to engender growth and, hence, employment.

Returnng to the question of growth and, perhaps, more importantly the creation of genuine wealth, what will cause the growth and increase in wealth? The answer, very simply, is that it is necessary to sell something to a customer in another country at a level which enables a profit to be generated.

Here is a little story which on the face of its shows how the economy works but when you think about i.....:

"It is the month of April, on the shores of the Black Sea. It is raining,and the little town looks totally deserted. It is tough times, everybody is in debt, and everybody lives on credit. Suddenly, a rich tourist comes to town.He enters the only hotel, lays a 100 Euro note on the reception counter,and goes to inspect the rooms upstairs in order to pick one.

The hotel proprietor takes the 100 Euro note and runs to pay his debt tothe butcher.

The Butcher takes the 100 Euro note, and runs to pay his debt to the pig grower.

The pig grower takes the 100 Euro note, and runs to pay his debt to thesupplier of his feed and fuel.

The supplier of feed and fuel takes the 100 Euro note and runs to payhis debt to the town's prostitute that in these hard times, gave her "services" on credit.

The hooker runs to the hotel, and pays off her debt with the 100 Euro note to the hotel proprietor to pay for the rooms that she rented when she brought her clients there.

The hotel proprietor then lays the 100 Euro note back on the counter.

At that moment, the rich tourist comes down after inspecting the rooms, and takes his 100 Euro note, after saying that he did not like any of the rooms, and leaves town.

No one earned anything. However, the whole town is now without debt, and looks to the future with a lot of optimism.

And that, ladies and gentlemen, is how the UK Government is doing business today."

Of course, the poor hotel proprietor is down by 1oo Euros in terms of cash but he effectively borrowed the money to pay his debts. There are no more Euros in the system but the overall (apparent) wealth has been increased by 100 Euros.

The only way to generate real wealth on a national basis is to export and to export you have to either make something or provide a service. Thus, investment has to be channeled into the regeneration of manufacture or the generation of service offerings attractive to the rest of the world. Services are unlikely to generate a significant requirement for employment, whereas manufacturing will. Building a manufacturing base - especially for products that the rest of the world will want to buy - takes time, education, training, resource and this, perhaps, is where the government should be spending our money.