Liverpool has avoided the worst in unmployment rises but can it last, asks Alex Turner
LIVERPOOL is the major city that has been least affected by rising unemployment in England throughout the downturn.
Analysis by LDP Business shows that of England’s eight largest city economies outside London – which together form the Core Cities Group – Liverpool saw both the smallest percentage increase in the number of people claiming jobseeker’s allowance from January, 2008, to the peak, and still has the lowest total increase from that start point.
Unemployment is described by economists as a lagging indicator, which means it takes several months from when the economy first weakens to show in rising jobless numbers. So although the UK entered recession in the second quarter of 2008, it was only from October that unemployment began to rise markedly.
As unemployment climbed across the country, Liverpool remained at least partially insulated, with the effects of the investment ahead of the city’s year as European Capital of Culture, its large public sector workforce and the boost provided by the newly-opened Liverpool One all credited with keeping the local economy relatively buoyant.
There was also the fear that several of these factors would be short-lived, with sharp increases to come later.
But monthly data from the Office for National Statistics (ONS) showed that it hasn’t happened. Not yet, at least.
Liverpool peaked in January, 2010, with a claimant count 48% higher than January, 2008, and which last month was 40% higher than the base point.
Bristol – the worst affected of the core cities – saw its claimant count soar 132% to July, 2009, and despite a temporary improvement, is now back up to almost the same level. The core cities as a whole peaked at 74%, a year ago, and is 64% higher now.
Liverpool has also shown more resilience among the places with long-standing high rates of unemployment.
At the end of 2008, Liverpool had the second-highest unemployment rate in Great Britain alongside Birmingham, of 7.1%, behind only Hull.
As the jobless numbers increased, Liverpool slowly slipped down the table and now has the eighth-highest claimant rate.
Neighbouring authority Knowsley has also seen a similar relative improvement, first getting out of the bottom 10 and is now on the verge of climbing out of the bottom 20.
Economist Peter Stoney, director of the Liverpool Research Group in Macroeconomics, points to a wide range of factors in Liverpool’s relatively good performance.
“Liverpool has fared better so far because of the effects of Liverpool One, and other retail developments, and because the carmakers, Jaguar Land Rover and General Motors have done well,” he said. “There has also been growth in the city’s knowledge and tourism economies.”
However, the latest ONS data highlights the fragility of the jobs market across Liverpool city region, with the claimant count rising and the number of vacancies falling.
At the same time the spectre of unemployment hangs over Liverpool because of its heavy reliance on public sector workers.
The much-discussed public spending cuts have only recently begun to translate into significant job losses and it will only be in the coming months that it will become clear whether, or to what extent, the private sector can absorb the departing public sector workers.
So far, nationally, the private sector has been able to absorb the fall in the public sector workforce.
During 2010, private sector employment increased by 428,000, to 23.0m people, while the public sector reduced by 132,000, to 6.2m.
Sophy Krajewska, Liverpool Vision’s director of corporate policy and strategy, said: “All the projections show that Liverpool and the wider city region has considerable potential for growth and not just in the four transformational priority areas – superport, knowledge, visitor and low carbon economies, but also in the city centre and Peel Waters.
“But most of these involve quite a long timescale before the jobs will come on stream – perhaps with the exception of the visitor economy and the city centre schemes which are currently underway.
“The impact of public sector job losses and indeed of shrinking public sector purchasing and investment power is already starting to be felt and that includes the impact on the private sector, particularly business services.”
However the number of people leaving public sector has been gathering pace. Public sector employment, which peaked at 6.33m in the final quarter of 2009 (due in part to the effects of employees of taxpayer-owned banks becoming classed as public sector workers), has fallen in each of the following four quarters – by 24,000, 27,000, 36,000, then 45,000 people.
Public sector employment in the North West is also falling slightly faster than the national average – down 2.6% year-on-year compared with 2.1% nationally, which accounts for 4,000 of the 19,000 jobs lost across the region.
“The challenge for the city is how to stimulate and support business growth now and over the next three to four years,” added Ms Krajewska. “The key is in helping those small and medium sized firms with the ambition and potential to expand.”
She believes that Liverpool’s steady improvement over more than a decade means that it is in a position where it can be far more resilient than it was able to in the aftermath of previous recessions.
She said: “Liverpool is on a steady trajectory to close the gap with the UK. Since 1999, it has moved up from 85 to 95 on the national productivity index.
“It has consistently outpaced other bigger cities in recent years.
“Public investment has helped to create the conditions for that growth but in fact much of the dynamism has been the result of substantial private investment.
“That investment has equipped the city with some first class infrastructure. It has increased its resilience and strengthened external and investor perceptions.
“The conditions are in place for Liverpool to maintain the momentum – albeit in some of the most difficult national economic conditions imaginable.”
