The white collar crunch: unemployment rising fastest for senior execs

by Atul Hatwal

The headlines this week were rightly dominated by the dismal news that youth unemployment crossed 1 million. But hidden amid the thousands of statistics released by the government, Uncut has uncovered figures that show a new and unexpected group beginning to feel the impact of the downturn.

Unemployment amongst senior executives has rocketed by 13% in the past year, significantly faster than the overall 7% rise in unemployment and even faster than the 12% rise in youth unemployment.

And while the increased unemployment rate for women has been in the news, in the top “managerial and senior official” category in the labour market figures its men who have been hit hardest.

Over the past year, unemployment amongst male senior executives went up by 14.3% while for women the rise was 10.7%.

At the other end of the job scale, levels of unemployment for unskilled workers rose, but by 4.6%, substantially below the headline average.  In the semi-skilled “process, plant and machine operative” category meanwhile, unemployment actually fell by 18.1% over the year.

Although the rise in absolute numbers of unemployed senior executives is comparatively small at 18,000 and their new unemployment rate of 3.3% is a world away from the 12.3% unemployment rate amongst unskilled workers, it will still potentially have disproportionately significant results.

First, spending in the economy will be hit, reducing demand; second, tax receipts will go down worsening the deficit; and, third, and not entirely unwelcome, there will be a broader impact on opinion formers and policy makers.

In terms of spending, the latest figures on earnings released this week highlighted an average weekly wage of £933 for the top ten per cent. Assuming the senior execs are in this group (a reasonable assumption since they are the most senior of the nine occupational categories), the rise in unemployment means lost wages of almost £1bn a year (£878m).

Although not all of this would have been spent, it still represents a cut in spending in the economy worth several hundred million pounds each year.

In terms of income tax, based on executive earnings being at the average for the top ten per cent, HMRC figures indicate lost revenues of at least £266m. Taking into account the effect on national insurance contributions and VAT, the total lost revenue to the exchequer will likely top £300m per year.

When combined with flatlining growth and higher benefit expenditures, this level of extra cut to revenue will decisively push the government off their deficit targets.

And in terms of the social impact, if large numbers of senior executives continue to lose their jobs then it’s likely that the people who shape the debate and make the critical policy choices – journalists, businessmen and politicians – will start to personally know people thrown out of work by the downturn.

What is happening in the country will cease to be an abstract political or economic question and become an issue with personal salience. For a government of gilded princelings who have never had to sign-on, or ever known anyone who has, this would be a profound shift.

The old Tory nostrum that “unemployment is a price worth paying” could even be called into question.

Politically, it will open up a new front on the government. The voices of the business unions, the CBI, the IoD and the chambers of commerce will be raised in angry defence of their members just as the public sector unions are mobilising on behalf of theirs.

The rise in senior executive unemployment over the past year has been sharp. If it continues at this rate, in the coming quarters, pictures of depressed executives will be vying with frustrated youth on our screens each time the latest hike in unemployment is announced.

The Tories have always been afraid of being perceived as a privileged elite, looking after their own while the rest of the country makes the sacrifices necessary to recover from the crash.

If plan “A” had gone as they expected, this is exactly what would have happened.

But now, after eighteen months of their disastrous economic policies, they might be on the verge of something quite extraordinary – turning one of their tropes from the election into reality.

Soon, maybe, we really all will be in it together.

Atul Hatwal is associate editor of Labour Uncut.

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3 Responses to “The white collar crunch: unemployment rising fastest for senior execs”

  1. Anon (sorry) says:

    Just as a basic point of logic, there is no such thing as an “unemployed senior executive”. If you’re unemployed, you are not a senior executive.

  2. AnneJGP says:

    I wouldn’t wish unemployment on anyone. That said, isn’t this something that should be welcomed, inasmuch as it implies that costs are being cut by shedding senior staff rather than by cutting front-line workers?

  3. Amber Star says:

    @ Atul Hatwal

    Unemployment amongst senior executives has rocketed by 13% in the past year, significantly faster than the overall 7% rise in unemployment and even faster than the 12% rise in youth unemployment.
    That’s Andy Coulson, Rebekah Brookes & the rest of the NoW team that are boosting those figures. I’m not going to cry for them… 🙂

    Seriously, a lot of senior managers can sense the way the wind is blowing… they are taking their big redundancy settlements whilst they can, paying off their mortgages & locking in their pension entitlement before there’s another raid on it by either their employers or the government.

    They’ll be financially secure & back working for the same firm in a new job or a new firm in the same job before you can say: Sheesh, I wish I could get away with doing that…

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