BELFAST BRIEFING:Officially, 58,000 are unemployed but the true figure is probably double that
MARKET DAY on a cold, wet November morning in Magherafelt offers a glimpse of how rapidly rising unemployment is draining the life from rural towns in the North.
The Co Derry town has experienced some of the highest jumps in jobless levels in the past 12 months. Streets with boarded-up shopfronts, quiet cafes and idle shop assistants are testimony to the reality of how the North’s latest jobless rate of 7.2 per cent translates on the ground.
New labour market statistics show that that over the past 12 months the number of people out of work has soared by 24,000, the highest yearly increase on record. Unemployment now stands at a high of 58,000. Like many other towns and villages in the Mid-Ulster area, Magherafelt has been hit particularly badly by the property slump and by the slowdown in the local manufacturing sector.
There are a few major employers in the town. The last textile factory closed more than a decade ago and local firms tend to be small scale. The construction sector was a major employer, particularly for young males, many of whom would have left school with few qualifications.
One in five 18 to 24-year-olds is out of work. That means, last month, 17,522 people under 25 claimed jobless benefits.
It is a shockingly high figure. Even current economic conditions may not fully explain how young people have been barred from entering the workforce.
The latest figures suggest there was no change in the number of people claiming jobless benefits last month. It remained at 53,700. But according to Richard Ramsey, Ulster Bank’s chief economist, the figures fail to reveal the dramatic rise in the North’s student population. He says that the number of young people who have opted to remain in education has risen by almost 20 per cent over the last year. There are 14,000 students in full-time education.
Ramsey says the rise is much steeper than in Britain. He believes this helps to explain why there was no change in the number of people claiming jobless benefits in the North last month, despite little improvement on the economic front generally.
“These unemployment figures are for October. Therefore, the fall in the youth claimant count in September and October by almost 1,300 in total could be explained by the rise in student numbers when term begins. The lack of employment opportunities is pushing more individuals into education,” Ramsey added.
But what is happening to the thousands of young people who do not have the luxury of choosing education over the dole queues? According to Prof David Blanchflower, the labour economist and former member of the Bank of England’s monetary policy committee, youth unemployment can leave “permanent scars not temporary blemishes” on a society.
In the autumn journal of Britain’s Royal Society for the encouragement of Arts, Manufactures and Commerce, Blanchflower argues that youth unemployment is now a “special problem” in the UK.
“For the young, a spell of unemployment does not end with that spell. It raises the probability of being unemployed in later years and carries with it a wage penalty. The consequences of unemployment are more far-reaching than for older people.”
He believes youth unemployment and adult unemployment are closely related to total crime rates. “Increases in the unemployment rate lower the happiness of the whole community,” Blanchflower warns.
This prognosis has far-reaching consequences for the North when taken into context with Ramsey’s perception that there is a large percentage of “hidden unemployment”. Ramsey claims there is a significant majority of people not on the unemployment register but not working and receiving benefits.
Between July and September, the number of economically inactive people in the North was estimated to be 575,000. This figure has risen by 23,000 over the year. It included 85,000 students, 82,000 people registered as long-term sick and 61,000 who cannot work because they are looking after family or home.
But aside from these figures, there are an estimated 56,000 people on the economic inactive register who state that they do want a job.
So, technically, rather than 58,000 people looking for work at the moment in the North, the truer figure is probably closer to 114,000, which changes the scale of the unemployment problem.
If Ramsey’s predictions are anything to go by, it is only going to get worse. “In our view, unemployment has not peaked but simply paused. We still expect the 60,000 level to be breached in 2010.”
For towns like Magherafelt, this means there is probably little chance of escape from the misery that unemployment brings with it and a very strong possibility of growing dole queues.
