Why unemployment will rise as the economy recovers in 2010
This is a simple insight, but might help a few people as they think ahead to 2010. At this time of year it is fashionable to make all sorts of predictions for the year ahead – since I am a futurist and make my money by helping people to make sense of the new world of work, I’d better put my money where my mouth is.
I believe that 2010 will see a slow, but consistent economic recovery throughout the world. I would hope that the new UK government would have the guts to cleanse the banking industry, by demanding a full audit and accounting of their liabilities. But I doubt this will happen. Nevertheless it appears that the last of great banking surprises has now come and gone, and that we can start to rebuild. Growth will probably start first in technology, medical and green industries, with a slow growth in construction. But construction has a problem coming as government money that has been brought forward from future years runs out. And that will probably be the biggest factor that inhibits growth and keeps it slow and steady.
One indicator, however, will put some people off and confuse many pundits. Unemployment is likely to rise and keep rising in 2010. Many will take this as a sign that the recovery is not happening. But they would be wrong. This is a simple lesson in knowing what a trend actually tells you.
In most countries, the unemployment figure is actually the number of people who have signed up for unemployment benefits or assistance. In many countries, it is actually the number of people who are actively seeking work. In the midst of a deep recession, as we have experienced over the past year, many people who are actually unemployed don’t bother to register themselves as job seekers. They reason that there’s no point. But as news of a recovery begins to seep through the media, their hopes begin to rise and they sign up as job seekers, hoping to find work.
And that’s why official unemployment figures will probably rise as the economy begins to recover.
It’s not going to be easy to be a strategist next year. 2010 is going to be a wild year. And my guess is that fortune will favour the brave… and the well informed.