Wednesday 14 August 2013

Expert Opinion: The recession and female unemployment in the East Midlands

A magnifying glass used to look at classified job adverts
Female unemployment has increased significantly during the economic slump

Chris Lawton, a senior research fellow at Nottingham Business School's Economic Strategy Research Bureau, looks at how female workers in the East Midlands could be suffering more than their fair share of job cuts during the economic slump.

A key feature of the recession that started in 2008, has been the relative stability of the UK labour market.

The UK economy experienced a significantly greater loss of output compared to the recessions of the 1970s, 1980s and 1990s, and recovery has been weaker compared to any recession including the 1930s. However, overall unemployment has increased by significantly less.

A number of concerning developments behind the headline indicators have received a lot of recent media attention. These include the weak growth in average wages and the apparent increase in practices that can place individuals in vulnerable positions despite being notionally employed, such as so-called zero hours contracts and the rise of necessity self-employment in low pay, low skill activities.

A development that has received remarkably little media attention, however, is the significant increase in female unemployment, despite an excellent report from the Fawcett Society generating a brief period of coverage in April this year. This development is particularly stark in the East Midlands region, where the latest Labour Force Survey (Office for National Statistics, April 2012 - March 2013) estimates place the unemployment rate for women above that of men (despite men making up a larger share of the labour force).1

The recessions of the 1980s and 1990s, and the long-term decline in manufacturing, mining and agricultural jobs that was accelerated during these periods, were strongly associated with the loss of jobs occupied by men. The legacies of these job losses continue to affect communities in the East Midlands, notably the former coalfield areas of north Nottinghamshire and Derbyshire.

Men who had performed skilled manual occupations in these industries found themselves less able to compete for the new jobs that emerged in the service sector. The increasing predominance of the services provided opportunities that contributed to a growing number of women in the UK workforce – alongside cultural changes and significant progress in the equalisation of employment rights and flexible working practices. The ONS estimates that between 1971 and 2011 the employment rate for women rose from 53% to 66%, while the male employment rate fell from 92% to 76%.2

The impacts of the recession of 2008 - 2009 were felt by both men and women, with men experiencing the greatest initial increase in unemployment – as the sectors where men are over-represented (principally manufacturing and construction) bore the brunt of early job losses.

However, where male unemployment began to stabilise from 2010, female unemployment has continued to increase.
In the UK overall, male unemployment increased from 5.4% to 8.9% between the periods April 2007 - March 2008 and April 2009-March 2010, before stabilising and then falling to the latest estimate of 8.2% (April 2012 - March 2013).

Female unemployment in the UK increased from 4.9% to 6.7% between the same periods, but has then continued to increase to the latest estimate of 7.3%.

In the East Midlands, female unemployment started to increase before the recession, from 3.8% to 5.6% between April 2004-March 2005 and April 2007-March 2008, but then continued to increase to the latest estimate of 7.8% – slightly exceeding the male unemployment rate of 7.6%, although it is still important to note that the numbers of men who are unemployed in the East Midlands remains higher than women (at 94,600 compared to 82,800, according to the ONS Labour Force Survey, April 2004-March 2005 to April 2012-March 2013).3

Male employment is relatively evenly distributed across the six largest employment sectors in both the UK and the East Midlands. However, female employment is overwhelmingly concentrated in just two broad sectors, with public administration, education and health accounting for 45.9% of female jobs regionally (slightly higher than the UK average) and distribution, hotels and restaurants (including retail) accounting for 21.6% (also slightly higher than the UK average). These two sectors have continued to experience job losses between 2010 and 2012, due to public sector cuts and subdued consumer spending respectively.4

The impact on female unemployment rates of job losses in these sectors is likely to have been exacerbated by several other short-term factors. Five years of sub-inflation wage growth has put pressure on household incomes while recent welfare reforms (including withdrawal of the family element of Child Tax credits where one adult earns a higher wage, freezing Child Benefit rates, and reduced contributions to childcare costs)5 have further incentivised women who had previously been full-time carers to start looking for work, moving from the Economically Inactive category into the ranks of the unemployed until they are able to find a job.

Therefore the continued increase in unemployment for women, as male unemployment has leveled off, can be explained by a combination of the sectoral concentration of female jobs – in activities that have been vulnerable to recent job losses – alongside a range of factors that include changes to the benefits system, which have particularly affected women as the main providers of care for children and other family members.

Further research is required to ascertain why women in the East Midlands appear to have been more adversely affected than elsewhere in the UK, although the higher than average proportion of employment in the public services, and the under-representation of jobs in the East Midlands in service sector activities that have seen recent increases in employment (such as financial and business services), are likely to be important factors.

1 ONS Crown Copyright, 2013. 'Annual Population Survey/Labour Force Survey.' April 2012 - March 2013. From NOMIS [accessed on the 8 August, 2013].
2 ONS Crown Copyright, 2011. 'Social Trends 41.' London: The Stationery Office.
3 ONS Crown Copyright, 2013. 'Annual Population Survey/Labour Force Survey.' April 2004 - March 2005 to April 2012 - March 2013. From NOMIS [accessed on the 8 August, 2013].
4 Ibid. April 2012 - March 2013. From NOMIS [accessed on the 8 August, 2013].
5 Institute for Fiscal Studies, 2011. 'The Impact of Tax and Benefit Reform by Sex.' IFS Briefing Note 118.