Recession or depression? | 15
been, in order to reduce the unemployment rate by one
percentage point from what it would otherwise have been.
Over the 2009-10 period there are four `new' aspects to the
prospective labour market shake-out which could emerge:
Asymmetrical regulation � The impact of the increase in
labour market regulation and employment law over the past
decade may have been partially hidden during the upswing,
but will now prove much more onerous in a downswing as
firms attempt to reduce costs.
High income unemployment � The 1980s recession was
characterised by blue collar unemployment, the 1990s recession
by white collar unemployment. One of the key characteristics
of this downturn could be the widespread emergence of high
income unemployment. Obviously, the greater the income
divide between employment and unemployment the greater the
potential impact on spending. However, in a 24/7 media
environment the impact on consumer confidence from news
coverage of affected households could also be very damaging.
Graduate unemployment � Around 400,000 people will
graduate from university in 2009. The big concern at present
is that a far higher proportion than normal will be unable to
find employment but will nonetheless have considerable debts
and face banks that won't extend any further credit facilities.
Missing migrants � Many of those who have entered the UK to
work over the past decade may decide to return home rather
than register as unemployed in the UK. Clearly, one of the key
determining factors will be the relative probability of gaining
employment in the UK or back home. Recorded changes in
employment, not just unemployment, will be important to
monitor in 2009-10.
Conventional
economic
models may
not work

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