The unemployment numbers are expected to be grim by the end of this year. But Bagehot notes in this column this week that the Brown circle believes that rising unemployment might not be as big a political deal as it has been in past recessions:
“But, in private, some of his associates argue that redundancies may prove less politically toxic for the government than was the case in past recessions—because they will not be concentrated, as they previously were, among low-skilled industrial workers ill-equipped to find alternative employment. These days, the argument runs, few workers expect to spend their careers in a single job, and the labour market is flexible enough for most to find new ones. The equally pressing imperative for government, therefore, is to address the über-worry beneath the fear of redundancy: voters’ terror, especially acute in Britain, of losing their homes. The government wants to prevent almost all involuntary repossessions, through, for example, a mortgage-interest deferral scheme. Safeguarding homes is relatively cheap (much cheaper than rehousing people who get evicted), and politically rewarding: a rescued homeowner is likely to be more grateful to Mr Brown than the beneficiary of more general remedies.”
I think Bagehot is right about repossession being a bigger fear than redundancy. But I suspect that the fact that job loses will not be concentrated socially and geographically might have a different political effect, making more people worry about whether or not they might be laid off.
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