Well, it could be just because you don’t know

That’s important in what follows. That’s because YouGov has reported that:

A survey of senior decision-makers at British businesses shows that a third (32%) say their company will have to let workers go before the end of the year, including 12% who plan to shed a fifth or more of their staff.

The message is loud and clear. It is that far from the economic crisis being over, once government support ends there is going to be a significant increase in unemployment in the UK. That is something I have predicted for a long time.

And I, and YouGov, and all those companies, could be wrong of course. But in the meantime the data findings are worrying. That’s not least because large companies are planning the largest redundancies, with half expecting to lay people off and a sixth expecting to make more than 20% of their staff redundant.

Smaller companies are more optimistic. Only a fifth expect to make redundancies with only 9% thinking more than 20% of their staff will be sacked.

Myself I’d go with basic ignorance as the problem here.

These are the numbers for job turnover. Not for unemployment, but for the flow through that state. Can’t be bothered to find the UK numbers but for the US – 5 to 6 million people leave jobs each month – some 3% of the 160 million workforce. About half that is quits, people leaving voluntarily for a new job. Half redundancies, firings, as companies change plans, downsize and all that. Some 5 to 6 million people get hired each month too. Which is why unemployment doesn’t rise by 6 million a month.

Further, among economists at least, it is well known that large companies tend to shed labour over time. Jobs growth comes from smaller companies on their way to becoming larger companies.

No, I’m not going to do the work to recast 32% saying they’ll fire a few workers into monthly numbers for firings. But you do see the problem here, don’t you?

The economy is always firing workers, larger companies more than smaller. Thus opinion poll evidence that workers will get fired, larger companies doing more of this than smaller, is not in fact a grand revelation. It’s normality. It’s also not proof that unemployment is going to rise – to determine the stock of unemployed we have to consider the flow out of that state as well as the one into it.

The reason the P³ doesn’t know all of this is simply that the P³ is ignorant upon the subject. But then it’s economics so we already knew that, right?

21 thoughts on “Well, it could be just because you don’t know”

  1. he hasn’t asked me and I am trying to recruit at least two new people this year. That’s increasing my workforce by 33%…..

  2. It’s scarcely even Economics, Tim, to know that people change jobs. Just ask anyone who’s tried to keep a good cleaner.

    Hell, even a stick-in-the-mud like me changed jobs from time to time.

  3. In fairness Tim, I do think unemployment will rise once furlough ends (if ever) but his solution seems to be to enact a North Korean style economic nationalization of every sector, leaving people in the same job in perpetuity. As you say, one more aspect of finance and economics about which has has zero knowledge, although he has held professorships in a number of UK ‘academic’ institutions…

  4. He’s probably so upset that he hasn’t been able to remain perpetually in the same job that he sees the solution to his personal woes is to engineer a world where everybody is forced to stay in the same job. Being forced to stay in a job is the only way he could ever remain in any job.

  5. With respect what you’ve written Tim, I don’t think either you are in the position to predict the future based on past experiences. The economy’s never been through what it has in the past year. There’s a ginormous debt millstone to drag & the prospect of higher taxes. People’s confidence has been shot to pieces. This could be a whole new ball game.

  6. Dennis, Noted Non-Economist

    There are Help Wanted signs all over the place around here. We have a labor shortage… In no small part because of overly generous unemployment compensation. We’ll never know the real state of employment/unemployment until the well runs dry on unemployment benefits.

  7. BiS

    I agree but that certainly is in no way a vindication of Richard Murphy, whose policies would result in the destruction of human life on earth. Or are we saying, cometh the hour, cometh the potato?

  8. Bloke in North Dorset

    He’s probably so upset that he hasn’t been able to remain perpetually in the same job that he sees the solution to his personal woes is to engineer a world where everybody is forced to stay in the same job. Being forced to stay in a job is the only way he could ever remain in any job.

    The Diocletian solution. That would make sense to Murphy because his grasp of economics is on a par with The Romans. Lets hope he never learns about Diocletian’s tax policies.

    https://en.wikipedia.org/wiki/Diocletian#Social_and_professional_mobility

  9. There’s a nice cartoon over at Dan Mitchell’s place: God says a mass extinction event is overdue and offers the dinosaurs a choice of massive asteroid hit or soviet communism. The pea-brained animals vote to take their chances with an asteroid strike. “I’ll save communism for the next ones”, says God.

  10. The job churn from one big corporate probably exceeds all the job creation by SMMs.

    @bloke in spain “the economy’s never been through what it has in the past year.” In the three thousand odd years of recorded human existence, there have never been wars before, pestilences and famines, outbreaks of political madness, and thus we have absolutely no examples to draw upon when planning our shortish term future. Is that what you are saying.

  11. TBF, I don’t think we’ve ever been through a pandemic where the Gov’t bent over backwards to protect the jobs of those who’d otherwise be ffected…

  12. @ Bongo

    I think it was you behind the NKVD Solicitors email?

    I still use my sock puppets to send Spud comments from “The Team at NKVD Legal” which I’m sure, given Spud’s sense of humour, causes much merriment.

  13. “TomJ

    TBF, I don’t think we’ve ever been through a pandemic where the Gov’t bent over backwards to protect the jobs of those who’d otherwise be ffected…”

    Those over 80 and the chronically obese or ill had jobs?

  14. Quite, TomJ. There’s a scenario where that would be described as a policy of backing the losers.

  15. @Shadeburst
    I don’t know about you but I don’t know anyone who survived the Black Death, the great plague of 1665, let alone the Diocletian reforms. Our knowledge of how long economic recovery took is very sketchy. On the other hand, we can look back to the 1930s and reflect that it took a combination of Hitler and Hirohito to drag the USA out of a decade of Depression

  16. @Diogenes
    Didn’t the Black Death put the kibosh on feudalism? Don’t suppose the Lords of the Manor saw that one coming.

  17. The front page of the paper was talking about the Covid epidemic in India. Tragedy & all that. Except a good hard cull of India’s elderly might do India a lot of good. Remove some of the dead weight (if you’ll excuse the expression) on the economy. Same may be true for other developing economies. Wouldn’t haver done Italy any harm, would it? Except Italy’s been bankrupting itself to avoid it happening.
    Predicting possible futures is not always a pleasant process.

  18. bis, newsflash: Third World hospitals are shit. Pictures at 11.

    That said, some of the third world hospitals I worked in were a damn sight cleaner than NHS hospitals I’ve had the misfortune to visit.

  19. Bis re Black Death, it certainly put paid to a lot of estates and villages. It also put a 7 year pause into the 100 Years’ War

  20. Reading Sumption’s history of the 100 year War, the English were able to get an army together quite quickly after the pandemic. The men-at-arms were not in the villages and areas that got decimated and seem to have avoided the plague. But that was short term. Once the generation who fought at Crecy in 1346 and Poitiers in 1356 aged, it was difficult to replace them. The French army, however, struggled to get an army in the field, despite their larger territory

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