Commentary – Unemployment

UK unemployment has risen sharply on three occasions since 1971: (i) in response to the Thatcher government’s anti-inflationary drive beginning in 1979; (ii) in response to the tighter government policies introduced following a surge in inflation in 1989/90; and (iii) as a result of the financial crisis beginning in 2007/8. Given the severe effect of the financial crisis on UK output the rise in unemployment in the UK post- 2007/8 has been surprisingly muted. This may be because of a trend towards part-time employment in the recessionary period. Total employment hours may have fallen more dramatically than the numbers employed.

Almost every country saw a sharp rise in unemployment post-2007. This was especially true of certain countries in the Euro-zone which were especially affected by the crisis itself, such as Ireland, and/or by the subsequent ‘Greek government debt crisis’ of 2009/2010 –Portugal, Spain and Greece itself. Greece and Spain in particular have experienced Great Depression levels of unemployment.

By 2015 unemployment rates in the UK, USA and Japan had fallen well below the levels they reached in 2010. Unemployment in the Euro-area as a whole was still above it.