Saturday, 25 April 2009

Recession: Keeping up appearances

Dizzy raised an interesting question earlier this week. 'Where is the recession?'

Many commenters agreed that signs of poverty, despair and social disruption are hard to spot. This failure to observe the tell-tale symptoms of recession could be middle-class Nelsonianism. However, in this recession, the middle-classes are apparently being hit as much, or more, proportionately as the labouring class. We should all be able to witness and tremble at the stone-faced skeleton figure of Mr Recession stalking amongst us, swinging his merciless scythe. But that's not the way this recession looks or feels.

There are a number of possible answers to this conundrum.

1) Let us not forget, as if we could, that our government has gone to great lengths – in fact lengths that may be unprecedented in the history of mankind – to make us feel as if nothing too dramatic has happened to our lives. One of the reasons government borrowing is reaching such staggering proportions is that this government is unwilling to allow public services to decline – at least until the general election absolves them from further responsibility. To take the least partisan description I can, Labour feel their proper role is to relieve the population from acute pain. As long as they have done this they will feel satisfied they can claim their Brownie points. It will be left to others to deal with the chronic long-term pain their short-term, pill-popping remedies cause.

2) Middle class professionals are being hit hard, but the middle classes do not complain. An analysis in today's Telegraph shows that, to date, the professional classes are indeed the hardest hit by redundancies. Property related professions are the most affected, with the number of architects claiming unemployment benefits over the past year increasing by 860%. Following behind are town planning technicians (696%), construction managers (581%), chartered surveyors (464%), town planners (425%). HGV drivers make an appearance amongst the redundant professionals with a 379% increase in Job Centre attendances. But solicitors, lawyers, judges and coroners follow just behind with a 371% increase in benefit claims. (Bankers are not mentioned, perhaps because they are unwilling to be classified.) The point to remember behind these statistics is that professionals are programmed to look on the bright side of life. It is a middle class trait not to reveal desperation. Keeping up appearances is vital. So is providing a sense of encouragement to family and friends. Many may also have a savings buffer, for the present, which can delay the full impact of recession while family life is re-engineered.

3) Those affected on the high street are mainly small independent entrepreneurs. The Telegraph survey shows only a 20% increase in unemployment claims from this class. But this is unlikely to reflect the true impact of reduced income on such businesses. Small business persons are inventive and resourceful. They operate on day-to-day market risk principles of counting pennies and employing minimum staff. They have no union or collective voice: representative bodies, such as FSB, FPB and chambers of commerce, are mainly discreet lobbying organisations. Moreover, the profile of inner-city small business persons has changed considerably over the last thirty years. Many have origins in other countries, such as the Indian sub-continent or the Middle East, and run family businesses. They also have large extended families, good contacts with local ethnic communities, and know well from experience how to stretch a reduced income to feed many mouths.

4) The labouring classes once were used to working for large industries that never collapsed. They began aged fifteen or sixteen and kept going in the same company or industry until official retirement, or forced to retire sick. But that was decades ago. Since the 1980s, when nationalised industries were privatised and unproductive industries closed, hands-on labouring workers have become used to employment through contract work. Living with employment that offers no long-term guarantees has become a fact of life. This recession presents greater employment challenges than for a dozen years, but the principle of natural job insecurity is one they have had to come to terms with over many years.

5) Many people who can still afford to pay for their homes are benefiting from collapsed interest rates through tracker mortgages. Those who benefit are naturally remaining pretty quiet about this windfall (in contrast to savers), and are probably stashing this cash beneath the mattress as a resource for harder times ahead.

6) Credit cards have not been banned and remain an indispensable means to multiply reduced income, albeit at near-criminal exorbitant rates.

So the conclusion to the conundrum of the 'absent recession' seems to be that it is still mainly a middle class affair and the pervading principles of Hyacinth Bucket ensure that not everything is quite as it seems.

How long it will be until barren streets populated by angry dole claimants and burning braziers offer an air of community menace may depend on how long the recession lasts and the strata of society it eventually affects. Unless, perhaps, we've all become middle class now.

Update 26 April
One glaring omission from the above that deserves mention, of course, is the size of the public sector payroll. Official statistics (ONS) put this currently at about 20% of total employment. One can expect this to be a protected sector at least until the middle of 2010. But, in addition, the scale of outsourcing to the private sector should not be overlooked, which was expected to reach £64 billion in cost this year.

1 comment:

Anonymous said...

The joke with outsourcing public services being that the unions will claim the world will end as soon as even the slightest hint of a deal being done to save the taxpayer some money!