Recession impacted unemployment numbers but long-term issues around worklessness remain

Cover of Economic inclusion annual report 2010New research from the Observatory shows the recession has led to nearly 100,000 more unemployed people in the West Midlands but long-term issues around worklessness remain.

The economic inclusion annual report 2010 (pdf, 929kb) identifies how worklessness issues in the West Midlands have changed as a result of the recession, and to what extent long-term issues remain.

In this report we particularly look at the impact of the recession on employment and worklessness in the West Midlands, and which groups of people have been most affected.

The report updates the economic inclusion baseline report (pdf, 2.3mb) published by the Observatory in March 2009, in which we examined long-term issues around worklessness in the West Midlands.

Key messages

Impact of the recession

The recession has seen a short-​term change in the level and make-​up of the workless population with nearly 100,000 more unemployed people, but things are already beginning to recover. The long-​term issues we identified in our baseline report remain.

In the early stages of the recession, growth in worklessness and unemployment was greater in the West Midlands than elsewhere, widening the gap with England. More recently, the gap has started to narrow again as worklessness and, particularly, unemployment have fallen quicker in the region than nationally.

Despite this early recovery, the gap between regional and national worklessness rates increased from 1.8 percentage points to 2.7 between 2007 and 2009.

Impact on key demographic groups

While increases in unemployment have been widespread, increases have not been level across all demographic groups. Those with no qualifications, and young people, have seen much higher increases in worklessness than other groups. These were both groups already subject to high rates of worklessness.

Male employment rates have fallen by more than female, so the gap between the sexes has decreased.

People from non-​white ethnic groups and people with disabilities or long-​term health problems have, if anything, been slightly less affected by the recession than other groups. However, rates of worklessness in these groups remain significantly above average.

Prospects for recovery

The proportion of employed men who are in part-​time or temporary employment has risen. While this is evidence of positive and flexible approaches by employers, it may mean that some of the recession’s impact has been masked by rises in underemployment rather than unemployment.

Once employment begins to increase, those who remained in work, even if on reduced hours or shortened contracts, may be better placed to take up permanent full-​time employment opportunities than those who are workless.

Previous recessions led to many people giving up the search for work and becoming economically inactive, leading to long-​term exclusion from the labour market. As a result of this latest recession, increases in medium and long-​term unemployment have not led to increases in economic inactivity so far. This is a positive outcome at this point but it’s still early in the recovery period and it will be important to continue to monitor levels of economic inactivity.

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