Britons debate drop in jobless rate. Some say it signals a turnaround, others say it's just a hiccup
Coventry, England — When unemployment rises as remorselessly as it has in Britain -- tripling in the last 5 years -- any decline, however slight, is cause for cheer. The latest seasonally adjusted figures show adult unemployment dipped by 7,400 from May to June. A mere 0.2 percent of the work force, the number's significance lies in the fact that it is the largest drop in five years.
It could also be a straw in the wind as to where overall unemployment, at 13 percent, may be heading because the adult unemployment rate provides the best clue to trends. Does the drop herald a turnaround in Britain's chronic unemployment situation, or is it merely a hiccup in what has otherwise been a relentless upward curve?
The Treasury takes an upbeat view. The Department of Unemployment, however, says ``no.'' They think the trend is still upward. The Confederation of British Industry is cautious, using the term ``respite.''
Not surprisingly the Conservative government of Prime Minister Margaret Thatcher heralds the figures as an indicator that its policies to cut unemployment are working. Some observers here say the government takes a rosier view because unemployment is regarded as its biggest political problem. It is widely viewed as the issue most likely to defeat Mrs. Thatcher.
There are signs that unemployment is looking a little less menacing:
Economists at leading British universities, if not more optimistic, are less gloomy about job prospects.
Both the Times (of London) and the Daily Telegraph are printing expanded lists of job vacancies.
Here in Coventry in the English Midlands, home to such famous firms as Jaguar, Rolls-Royce, and Massey Ferguson, there is a feeling that things are picking up.
Down at the Job Center on New Union Street, where 8,000 job seekers pass through every month, 10 percent more applicants are finding jobs than last year.
``This is a trend we're finding throughout the Midlands,'' says Peter Shearing, Coventry area manager for the employment division of the Manpower Service Commission. ``Certainly there has been an increase in the number of service industry jobs. . . . Alongside that, for the first time in the last three or four years we are seeing a slight increase in demand [for] traditional engineering skills.''
Against that, it needs to be pointed out that there are sharp regional variations. Unemployment remains very high, for instance, in Northern Ireland and Scotland with no discernible signs that it is receding.
Government spokesmen and economists are generally reluctant to forecast if unemployment, stuck at over 3 million, will come down -- or by how much.
One economist who is not shy about forecasting what might happen is Prof. Alan Budd of the London Business School: ``We predict that unemployment will fall from 3 million and come down by 200,000 or 300,000.'' Not a significant reduction, ``but at least it is down.''
``If the government is to have any chance of winning the next election we'll probably have to see three things happening,'' Professor Budd says. His list:
1. Inflation brought down to about 5 percent. Currently it's closer to 7 percent.
2. Fairly strong economic growth so that people feel they're getting comfortable increases in pay.
3. Unemployment falling steadily for the next three years.
The government is proud that it has held inflation down, increased productivity, and attracted investment. If it weren't for stubborn unemployment, a Thatcher adviser says, Britain's economy would be regarded as a ``smashing success story.''
Ken Edwards, deputy director-general of the Confederation of British Industry (CBI), echoes much the same theme.
He says that, by and large, the government has got its economic priorities right. He gives the government credit for some of the recent successes. ``We've had the highest economic growth in Europe, and we're anticipating growth of about 4 percent in the current year,'' he says. ``Manufacturing went up 14 percent last year, and British competitiveness over the last four or five years has increased by 21 percent over other countries.''
Despite what might be regarded as positive signs, unemployment is seen by many to be mocking the government's economic success. The problem has become a bigger political threat since unemployment has moved steadily southward where most Conservative voters live.
Thatcher's critics argue that she is too attached to monetarist policies and more preoccupied with the figures of inflation than the human face of unemployment.
Such criticism has not influenced Chancellor of the Exchequer Nigel Lawson who remains committed to keeping a tight hand on inflation even though it has started moving up again.
Trade unions, the Labour Party, even the CBI, have advocated a substantial capital works program to rebuild sewers and roads, thus employing hundreds of thousands of people. The government is loathe to do this, partly out of its aversion to public spending and partly because it doesn't feel these are permanent jobs.
At the same time the government's success in securing new jobs, an area where it is more successful than most European governments, has been largely in the creation of part-time jobs.
When the general election, which is expected in 1987, gets closer, the pressure on the government to show it is making inroads on unemployment will increase.