Analysis of Eurostat data/3
An overview of the employment situation in the British Isles by prominent Economist Tom Weyman-Jones. Estimates show a slight rise in unemployment rates. The loosening of ties with the EU single market would bring no advantage. But there are other peculiarities of the British system. “We decided to leave at the worst moment…” SIR continues its European survey on this issue
Increased unemployment rates in the UK – from 4.9% in 2016 to 5.2% in 2017 – with forecasts registering a worsening in 2018 of up to 5.6%, are reportedly due to the Brexit. Tom Weyman-Jones, Emeritus Professor of Industrial Economics at the University of Loughborough, has no doubts. “After the referendum of last June 23, with which the United Kingdom chose to leave the EU, employers have turned more cautious about hiring because they are not sure of what will happen next, and fewer people have sought new jobs”, he said. “In the same period, Mario Draghi and the European Central Bank’s quantitative-easing package began to have effect on the European economy, which is gradually gaining stability. Even though growth is not at full speed yet, the pace is steady, and there are good prospects for improvement.”
“It was the wrong moment.” Commenting Eurostat’s latest findings on employment in the EU, the expert ascribed the slight decline in unemployment in Italy – from 11.7% in 2016 to 11.6% in 2017 – to the European Central Bank, while estimates project a further decrease, down to 11.4% in 2018.
Unemployment rates’ decline in the Euro area – from 10% in 2016 to 9.6% in 2017, down to 9.1% in 2018 – is equally ascribed to ECB intervention
“Although Europe’s growth, which had stopped during the years 2013-2014″, following the outbreak of the crisis in 2007, “is proceeding at a very slow pace, it is well underway and it coincided with the slowdown of the UK caused by the Brexit vote”, pointed out Professor Weyman-Jones. “The British have chosen to leave in one of the worst moments, just when the measures introduced by the European Central Bank started to take effect.”
Remarkable differences. For the economist, “it should be borne in mind that the British job market is completely different from that of the Euro area as a whole. In fact the former is more flexible and characterised by part-time jobs. This explains the UK’s unemployment rate, that stood at 5% for a long period, one of the lowest unemployment rates” in Europe. “Companies in Great Britain face few legal impediments to redundancy when they need to cut costs owing to declining sale rates. There ensues that when the same company recovers it’s easier to hire.”
“Futhermore, employees are willing to cut their salaries in order to keep their jobs”,
continued Weyman-Jones. Conversely, in France and in other Euro-zone countries, “national legislations make it more difficult to dismiss employees. As a result, employers prefer to offer unstable part-time jobs. In the UK, also thanks ECB support, the private sector managed to create many new jobs during the period of recovery from the 2007 financial crisis, amounting to more jobs than the number of new immigrants, namely 250 – 300 thousand each year”.
Part time, precarious employment… There are other reasons for the present unemployment rate in the United Kingdom, such as “population ageing and widespread part-time jobs among senior citizens who discover that their pensions are insufficient and start working on their own to make ends meet. These precarious jobs are not comparable to veritable employment, but they serve the purpose of increasing job rates, which fail to go into the details of the labour market.” For Professor Weyman-Jones, “the idea that Brexit will be completed in two years and that it will enrich British economy is a dangerous delusion.”
With the passing of time – he claimed – British citizens will realize that their “NO” to the EU was a very bad idea
They might regret it, or it may happen that the negotiations between Great Britain and the European Union will end up transforming both British and European economy. “Even if they continue doing business with the EU, commodities will be more expensive and it will become necessary to carry out cuts in other areas”, the expert remarked. “The pound will grow weaker and Great Britain could be forced to specialize in its best-selling goods, in financial services, scientific and pharmaceutical research, state-of-the-art engineering, creative and media industry, including films and TV-shows, to the detriment of agriculture, foodstuffs, and non-qualified manufacturing industries such as textiles.”
Weaknesses in the system. Does the Brexit process pose risks also for the EU? “It does. It will be harder to export cars, clothing, and foodstuffs to the United Kingdom. In fact these items are bound to become more expensive for British people because the pound will depreciate also as a result of custom fees imposed by Europe”, said Professor Weyman-Jones. “Moreover, we should not forget the fragility of the European banking system, especially if Germany continues opposing the ECB plan for Greece.”
“In short, both the EU and Great Britain have a lot to lose from an irreversible divorce.”
The risks linked to a “hard Brexit” will grow “increasingly evident in the coming months, and this experience risks transforming the British and the European economy alike.”
