What’s right for Aberdeen isn’t for York; unemployment needs city-specific solutions

Paul Swinney is an economist for Centre for Cities

Centre for Cities launches Cities Outlook 2012 (pdf) today, which shows how cities are fairing against the backdrop of a sluggish national economy. This year the report focuses on unemployment in our largest urban areas.

Figures released last week reinforced the gloomy national economic outlook, showing that unemployment in the UK continues to rise and now stands at 8.4 per cent – but unemployment is not evenly spread across the UK. While some cities, such as Cambridge and York, have many fewer job seekers than the national average, others, such as Birmingham and Hull (see Figure 7) have very high levels of people claiming jobseeker’s allowance (JSA).

Figure 7:

For this reason both the government and the work programme providers must take a varied response to the UK’s unemployment problem. The report, sponsored by IBM and the LGA, shows that not only is there a big difference in the number of job seekers between cities but the gap between them has also increased in recent years.

While the number of people in Cambridge claiming jobseeker’s allowance (JSA) is just 1.8 per cent of the total working age population, the number of people claiming JSA in Hull stands at 8.0 per cent.

And the gap between the two cities has more than doubled since the onset of the recession; it has widened from 3.1 percentage points in February 2008 to 6.2 percentage points in November 2011.

Similar patterns are seen for youth and long term job seekers. In Grimsby around one in 10 people aged under 25 claims JSA. This is in clear contrast to York where just one young person in 40 claims unemployment benefit.

Hull in particular has a large concentration of people who have been claiming JSA for more than one year. Although this amounts to only 2.1 percent of the total working age population it is well above not only second placed Liverpool (1.7 percent) but also, three times the UK average (0.7 percent). This is in stark contrast to Aberdeen, where only 0.3 percent have been claiming JSA for over 12 months.

These trends could have worrying consequences – previous research has shown the long term ‘scarring’ effects that youth and long term unemployment can have on future employment prospects.

In responding to the growing unemployment challenge, the government’s approach to tackling rising unemployment to date has largely ignored geography, despite it being a key component of the problem.

Nick Clegg recently announced the ‘youth contract’ as a response to youth unemployment exceeding one million. Unfortunately the national approach of this policy does not account for the greater difficulty that a young person in Grimsby faces in finding a job than one in York (see Figure 9). And yet this is a key dimension of the unemployment problem and one that future policy will need to address.

Figure 9:

The economic geography of the UK is highly uneven, and economic policy should acknowledge this unevenness. What is right for Bournemouth or Aberdeen isn’t necessarily right for Grimsby or Liverpool. Any future unemployment policies in particular should reflect this.

See also:

• Cameron needs to start backing our young people and universities - Sally Hunt, January 18th 2012

• Grim economic week: 128,000 more people jobless at Christmas - Alex Hern, December 14th 2011

• Unemployment: Plan A isn’t working - Richard Exell, December 14th 2011

• George Osborne is the downgraded chancellor of a deflationary government - William Bain MP, December 8th 2011

• Unemployment hits 17-year high – record number of young people out of work - Shamik Das, October 12th 2011