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The TUC is appealing to the government today to raise jobless benefits after news yesterday of at least 5,000 job cuts by leading British companies.
Ahead of official data released today that is likely to show another big rise in unemployment, Virgin Media said it would slash 2,200 jobs, Yell said it would cut another 1,300 jobs, Psion said 220 jobs would go, and Vodafone announced it would cut costs by £1bn, which is expected to involve thousands of job cuts among its 47,000-strong European workforce.
Taylor Wimpey became the latest construction firm to announce job losses, admitting it had shed 1,000 employees over the past two months alone, on top of 900 that went earlier in the year. And GlaxoSmithKline said it would close its pharmaceuticals plant in Dartford by 2013, which will cost 620 jobs.
Brendan Barber, TUC general secretary, said the government had to respond urgently by raising the jobseeker's allowance.
"Putting more money into ordinary people's pockets must be part of the response to the recession," he said.
"Tax cuts have a role, but there is an even stronger case for boosting unemployment benefit. It is the quickest way to stimulate the economy and protects the newly unemployed from a catastrophic fall in their income," he added.
"Jobseeker's allowance is less than £10 a day. Going from a typical wage down to this poverty income will be a terrible shock for people losing their job through no fault of their own."
The TUC said the gap between the benefit and earnings had widened significantly over the past 30 years because the jobseeker's allowance had increased with inflation rather than earnings. The TUC is calling for the single person's allowance of £60.50 a week to be raised by £15 a week.
"The government can pay for this by closing the tax loopholes the super-rich use to avoid paying a fair share of tax," Barber said. "There will be some justice in making many of those who did spectacularly well from the unsustainable asset bubble that has now burst contribute to helping their victims."
Unemployment is becoming more widespread as the recession starts to bite. The claimant count - the number of unemployed eligible for benefits - has been rising strongly for the past eight months and stood at 940,000 in September. Experts expect it to rise much more through next year as the economy sinks further into recession.
The Bank of England's labour market expert, David Blanchflower, has predicted that the wider labour force survey that measures the number of people looking for work will top 2 million by Christmas after it jumped 164,000 to 1.79 million in the three months to August. That big rise came even before the financial crisis in September and October, so further big rises are expected.
Official unemployment figures in Britain have been at multi-decade lows for the past few years but they are likely to become a major issue before the general election expected in early 2010. It will also form an uncomfortable backdrop for the pre-budget report of the chancellor, Alistair Darling, due in the next fortnight.
The jobless numbers come after Bank of England data revealed yesterday that banks had failed to pass on its half-point interest rate cut to new or remortgaging customers last month. The Bank showed that the average standard variable rate in October remained unchanged at just under 7% despite the monetary policy committee cutting the Bank rate by 50 basis points (bps) to 4.5%. Tracker rates for new borrowers actually rose by 72 basis points to 6.84% for loans with a maximum loan-to-value ratio of 75%.
The banks, said Danny Gabay, director of Fathom Consulting, "may have agreed to pass on the 150bps cut, but banks have not yet passed on the 50bps cut that preceded it. The less they pass on, the longer any kind of meaningful recovery in housing and consumer demand more widely is likely to take, increasing the risks of a prolonged period of weak activity."
There was some good news for consumers as oil prices fell to their lowest for 20 months, with US crude prices below the $60-a-barrel mark, raising the possibility of further falls in prices at the pumps.
The impact of lower oil prices, though, will be dented somewhat by another fall in the pound's value against the dollar yesterday. Sterling fell to below $1.54 and to a record low against the euro of 82.1 pence. Against a basket of major currencies, it hit its lowest level for 12 years.
The FTSE suffered another big fall yesterday, dropping 3.6% to 4,247.
- Unemployment and employment data
- Trade unions
- Virgin Media
- Yell
- Vodafone
- Taylor Wimpey
- Economic policy
- Credit crunch
- Redundancy
- State benefits
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