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Wednesday, 17 June 2009

The client state

Are we seeing green shoots of recovery? Not even close. US industrial production figures recorded their 16th monthly drop in May according to Fed data released on Tuesday. The glaring figure, though, was industrial capacity utilisation which dropped to a record-low of 68.3 per cent. The manufacturing figure came in at an even worse rate of 65 per cent. Prior to this recession, the low for the series which began in 1948, was 68.6 per cent set in December 1982.

UK unemployment is rising faster in this recession than at anytime since the 1980s, according to official figures. UK unemployment rose to 2.261 million in the three months to April, the highest since November 1996, according to the Office for National Statistics. The jobless rate rose to 7.2%, the highest since July 1997. The number of people claiming unemployment benefit rose by 39,000 in May, less than the 60,000 which had been forecast by analysts. The claimant count rate rose to 4.8%, the highest since November 1997.

Still if you live and work in the la-la land that is the public sector you won't have felt any of this. In fact you will have been stirred by Labour statements that there will be cuts if Conservatives form a government after the next General Election, and cuts mean job losses for thousands of doctors, nurses, teachers etc.

That isn't even close to the truth, although it is clear that there will be cuts who ever is in power. But it doesn't stop the Labour Party gunning desperately for the votes of public sector workers, who have been largely unaffected by the recession that has ravaged the private sector, causing people to lose their jobs, careers and homes. This is simply a dog-whistle message. When public sector workers hear the words "cuts in services" they don't think of the pour souls who might fail to benefit from those services, but the loss of their own jobs.

But it's coming. Whichever party wins there is a £175 billion annual deficit to fix, and a lot of that is going to come from cuts.

Just remeber this: the number of people in public sector employment was 6.02 million in March 2009, up 15,000 from December 2008, while the number of people in private sector employment was 23.09 million, down 286,000 from December 2008 (ONS, Labour Market Statistics, first release June 2009).

In the three months to April average earnings, including bonuses grew by 0.3% in the private sector, compared to a rise of 3.6% in the public sector (ONS, Labour Market Statistics, first release June 2009).

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