The University

A leading academic at Coventry University says that in spite of a positive economic upturn, unemployment in the UK is still set to rise well into 2010.

Professor David Bailey from Coventry University’s Business School said that with job losses growing faster in the UK than much of the rest of the EU, there have been numerous calls for greater efforts to keep workers in jobs through the downturn:

“Whilst the government should be praised for measures to help unemployed workers find training and/or employment (such as its £1 billion Future Jobs Fund), it has failed to act in terms of actually keeping workers in jobs.”

This is in stark contrast to the situation Germany, where some €6 billion has been spent on a temporary wage replacement scheme that has helped keep people in jobs through the downturn and positions Germany so that skills and capacity are still in place when the upturn comes. Short-term wage subsidies are also being used in France, Italy and Spain.

Professor Bailey added:

“Of course, we were told that Britain's 'flexible labour market' would position us well for a speedy recovery. Yet the reality is that France and Germany are already emerging from recession.”

Back in May, a “march for jobs” in Birmingham took place with the main reason to call for action to support jobs - including a wage subsidy.

A well-worked out proposal was put together by the TUC and the Federation of Small Businesses (FSB) for a fund to support up to 600,000 workers a year through measures like short-term wages. They felt that the scheme would help viable companies get through the downturn and help them compete and expand once the situation improves.

Professor Bailey thinks that access to the scheme should be dependent on long-term business viability and genuine need - assessed and agreed by unions, employer and government representatives.

He said:

“The recent report by the House of Commons Select Committee on the West Midlands called for a proper cost analysis of such a scheme. The Committee were unconvinced by government arguments against such a proposal.

“Consumer expenditure may recover but in all likelihood won't grow faster than the economy more generally. Property and construction will take time to recover. One day this recession will be over, and we will need a strong manufacturing exports sector to drive growth. Manufacturing will matter.

“A temporary wage subsidy is just one way that this sector can be helped in the short-term so that longer-term the economy can perform better.”

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