Economics Commentary Essay

Sharp skip over in un interlocking as financial crisis discovers jobs market placeBritish unemployment immediately posted its biggest place upright since the takerys give way recession 17 years ago as the financial crisis filtered through and through to the jobs market.Official figures showed unemployment mensurationd by International Labour Organisation (ILO) radixards ruddiness by 164,000 in the three months to August from the previous quarter to stand at 1.79 million. The rise took the jobless rate up half a percentage point to 5.7%, also the biggest jump since July 1991.These make senses argon unfeignedly horrendous and much worse than I had feared, utter David Blanchflower, a parturiency market expert and member of the Bank of Englands monetary polity committee.He told guardian.co.uk his earlier prediction that unemployment would rise to 2 million by Christmas at once see to ited conservative. Unemployment go forth be above 2 million by Christmas. I am particul arly worried at the 56,000 rise in the number of young unemployed tribe. These are school leavers who are otiose to cast a job or claim benefits, which is why the claimant count has non risen even faster than it has, he s embolden.The number of Britons bulge out of work and claiming jobless benefits rose by 31,800 last month to 939,000, the one-eighth monthly increase in a row, and Augusts rise was revised higher to 35,700. The City had expected a 35,000 increase for September.This questionable claimant count measure is always lower than the broader, internationally recognised ILO measure which takes people non claiming benefits, because just about unemployed people are not entitled to claim benefits, or choose not to do so.The rise took the claimant count jobless rate up to 2.9%, its highest level since January 2007.The prime minister, Gordon Brown, responded to the figures this break of the day by pledging the government would do everything it could to create jobs in the UK economy, which is teetering on the brink of recession.The government also announced today it was making an extra 100m operable to retrain workers who lose their jobs.The employment minister, Tony McNulty, said the jobs data painted a bad picture of the UK economy But the job is to whole tone onwards and see how we tramp deal with any dip in employment rather than talking about the causes.The number of employed people dropped 122,000 to 29.4million over the three-month period.The FTSE 100 beastly more than 3% this morning, wiping out all of yesterdays gains. The mood darkened after the unemployment figures, and the index of leading shares fell more than 150 points to 4235.6.The Liberal Democrats work and pensions spokeswoman, Jenny Willott, urged the government to fling its attention to unemployment and inflation, now the banking rescue package had beeen agreed.Real families across Britain are suffering, not just those work in the Square Mile. As the number of vacancies s hrink, it allow for be harder and harder to get people back into work. It will not simply be a case of retraining the unemployed if there are no jobs for them to return to, she said.The number of job vacancies dropped by 62,000 from a year ago to 608,000 in the three months to September. And 147,000 people faced circumlo incinerateion in the three months to August, up by 28,000.For many people, a bare Christmas lies ahead as the fallout from rootmarket turmoil sprinkles to the rest of the economy.Brendan Barber, the general secretaire of the TUC, said We are now seeing the effect of the credit coquet on the rest of the economy. I fear that the whole economy will soon feel the imp puzzle out of the problems in the banking field.He urged the Bank of England to excuse interest rates once more to avoid a severe recession.Derek Simpson, the occasion general secretary of the Unite union, said Government intervention should not just stop with the banks. Action across the wider e conomy is necessary to foster jobs and the economy in a recession.Alan Clarke, UK economist at BNP Paribas, said If you look at the claimant count number, it wasnt as bad as expected, provided if you look at the ILO, it was simply awful. These numbers are falling kill a cliff.In a sign that consumer price inflation now at a 16-year high of 5.2% is not feeding into reward, annual clean earnings growth slowed to 3.4% in the three months to August, its weakest in five years.As for pay pressures, the average earnings numbers remain very subdued, said Philip Shaw, the chief economist at Investec. The turn over market appears yet again not to be an inflationary threat to the economy which helps to justify the cut in interest rates last week.Economists believe it is going to get worse. Thousands of jobs are universe lost in the City, where banks have merged or collapsed, and on the high street, where growing numbers of retailers are going bust.Manufacturers determined off 46,000 workers in the three months to August, taking the total number of manufacturing jobs to 2.87million, todays figures from the Office for National Statistics showed.Job losses are spread across the economy, with Cadbury announcing 580 job cuts this week and ITV cutting about 1,000 jobs. The Centre for political economy and Business Research estimates 62,000 financial jobs will be lost by the end of next year.Nigel Meager, the director of the Institute for Employment Studies, said No part of the country is spared. Much attention has focused on high-end jobs in the City. In an economic downturn, however, the strong human cost is likely to hit lower-skilled workers who find it harder to move into another job and have less of a financial cushion to see them through difficult times.As vacancies track to evaporate, competition for any job available will become jolting and the existing semipermanent unemployed, as well as young people entering the labour market will be particularly disadv antaged. interpretationOne of a governments macroeconomic goals is low levels of unemployment. other way of expressing this is to say that governments desire full employment in its economy. Unemployment exists at heart an economy when there are people who are registered as willing, undefended and ready to work at the market clearing wage, but unluckily do not hold any jobs.The above article deals with the sharp fall in the employment rates occurring in Britain, affecting the stock market, the government expenditure, the redundant employees, and the Britain economy itself. This sharp rise in unemployment has been caused in the main due to the global credit-crunch.Underemployment could also be occurring in the Britain economy since workers abstracted full-time jobs would be able to find only part-time employment. This would thereby result in lower wages and lower output for each(prenominal) worker.Demand-deficient or cyclical unemployment, which has taken place in Britain, has occurred due to a lack of sufficient goods and services organism demanded, as well as a poorly operating labour market.This Demand-deficient unemployment is illustrated in the figure to a lower placeHerein, the causal factor resulting in disequilibrium unemployment is that labour markets are not working very smoothly. This is so because of the financial crisis, which resulted in companies aiming to execute cost-cutting measures, and thereby resulting in the labour resisting much(prenominal) wage cuts. Since workers are not passive commodities, the income wages will go up easily but will chorus from falling this is because they are sticky downwards. In the above diagram, the demand for labour falls from ADL1 to ADL2 due to the fall in demand for goods and services. But as mentioned earlier, the workers real incomes do not fall to W2, so long as equilibrium is not attained. This therefore results in the disequilibrium unemployment of Q2- Q1.Structural unemployment has also occurred in Britain as the structure of its economy has undergone a severe change. With the degree of unemployment world very serious, Britain is seeing a significant loss of jobs in the real terra firma, Information technology, and food industries. This is very bad for the economy since this situation can remain for another few months.The Britain government may use the aid of a variety of strategies to reduce the unemployment. This government can provide some aid to the employers and also encourage trade in creating employment. Structural tolerance policies can also be designed to align labour skills with the take of employers, such as retaining schemes and appropriate use of technology Gordon Brown has already chosen this step by announcing 100m for retraining. Even policies designed to stimulate the levels of amass demand, such as the use of fiscal and monetary policies, will present effective in mitigating the effects of this disaster.But nevertheless, the British government will find the goal of full employment difficult to achieve. This would be to reasons such as the unavoidable occurrence of inflation when trying to reduce demand-deficient unemployment. The limitations of utilize Fiscal policies to raise the Aggregate demand would also hinder the act towards attaining full employment. Examples of these would be time-lags and the crowding out effect.The short-term doctors of this situation would include reduction in the government expenditure, arising due to more money being provided as unemployment benefits and also due to less tax revenue being received by them. Another short-term effect would be the probability cost arising in terms of output foregone and the indisputable inefficiency.The long-term impacts of this sudden unemployment include the individual and social costs born mainly by the unskilled and lowly-paid workers. These workers will certainly find it difficult to look for suitable jobs in the future. Even the impact on poverty and income diffusion is enormous, due to a large majority of workers within the primary sector being made redundant. In Britain, for example, a majority of the real estate workers are being dismissed. Thus there has stemmed an unequal impact of unemployment in terms of region, urban/rural, gender, race and age. This could be particularly savage for in determining the racial distribution of Britain.