Will Hackney return to 17% on the dole?

In December 2007 there were 2,514 people claiming job seekers allowance in Hackney South and Shoreditch. By last month, May 2009, this had increased to 5,296 people.

In December 2007, the 2,514 people claiming JSA represented 4.7% of Hackney South’s working population. The 5,296 people now making the claims represents 7.4 per cent of the working population in Hackney South and Shoreditch.

To check the figures here's a link to the Office of National Statistics webpage on regional JSA claimants.

There is no sign that this trend is weakening and considering that this recession has been described as most extreme in several decades, is there a possibility that JSA claimant levels could exceed the 17% of working population seen in the 1990s?

The last detailed report on the borough’s economic situation was published in 2007 ( Hackney's Economy EDP Paper 2007 ) at a time when the level of claimants was falling faster than the national average.

The report said: “Since the early 1990s unemployment claimants have fallen from over 17% of the economically active population to below 6% in 2006. This has been consistent with the economic trends witnessed in London and England and Wales, although the decline has been steeper in Hackney.”

This now appears to be in the process of a sharp U-turn. Earlier this month the Office of National Statistics released the May figures for people claiming Job Seekers Allowance. In Hackney South 7.4% working population is now on the dole, up from 7.1% in April and 6.8% in March, 6.4% in February and 5.8% in January 2009. In December 2007, the level of JSA claimants was 4.7% of the working population.

The TeamHackney report also outlined the challenges facing the borough.

The biggest of these, and one which still dwarfs the levels of claimants in the borough, is the issue of 'worklessness'. There are more recent figures but this document on the borough's worklessness policy( Team Hackney Worklessness Model) provides this outline: "Hackney’s employment rate is currently 55.7%, which is almost 13% lower than the London average. With nearly 63,000 people of working age residents either unemployed or economically inactive, Hackney’s worklessness challenge is huge. Indeed, for Hackney to improve its employment rate to that of the wider London economy, a further 18,000 residents need to move into sustainable employment."

This is where the council's attention has been focused for the last few years - on the people in the borough who aren't looking for work.

In contrast to TeamHackney's concern about worklessness, the view on Job Seekers Allowance claimants suggested that high levels of claimants didn't mean that there weren't any jobs: "The raw data on claimant unemployment masks what appears to be quite considerable amount of churn within the labour market. Between March 2003 and February 2006, over 10,400 people have left the claimant register as a result of finding employment and a further 6,500 have moved into accredited training or education. This suggests that Jobcentre Plus and other employment initiatives in the borough (such as Working Links with 2,289 job outputs in 2004-6) are relatively successful at finding employment or appropriate training.

"However, given the relative stability of the total number of claimants it would suggest that many people are entering into short term or unstable employment and soon return to the unemployment register. This is supported by recent research undertaken by Jobcentre plus. A random sample of 730 clients claiming JSA benefits confirmed that overall 64% of the sample had claimed JSA benefits at least twice during the analysis period of one year."

This was the view when claimant levels were falling and the biggest issue was the number of people who did not want to work. Now people who do want to work are losing their jobs and not finding new ones.

Some related issues:

There is evidence that the level of entrepreneurship in the borough is declining: Hackney's entrepreneurs are disappearing.

Diane Abbot, MP for Hackney North and Stoke Newington, and others are also concerned that Hackney residents are not benefiting from employment opportunities that were expected to come with the Olympics: details and links can be found in this blog: Election fraud epidemic: More to come.

With some misfires: Diane Abbott's muddled crusade for the unemployed

Last week the Evening Standard singled-out Hackney South and Shoreditch in story about rising levels of unemployment pointing out that more than 10% of men in the constituency are unemployed.

A number of candidates for the European Elections answered questions about Hackney's economy in the three previous blogs:

Candidate 8: Labour promotes ghettoisation
Candidate 3: EU won't allow Hackney workers to be undercut

The Socialist Party of Great Britain candidate said that areas that had seen rapid increases in employment levels in the good times would be see equally rapid losses when things get bad.