Recession, Restructuring and the Fate of the Unemployed: Evidence in the Underclass Debate

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Abstract
High levels of unemployment over more than a decade together with industrial restructuring suggest there may be a widening gap between the work chances of unemployed people and the rest of the workforce in Great Britain. Labour Force Survey data show that the proportion of unemployed people who had found work one year later was much lower after the economic recovery of the late 1980s than it was ten years previously. We model trends between 1979 and 1989 in the work chances of unemployed people relative to the chances of people in work. During the first half of the decade work chances of these two groups diverged, and though later economic recovery enabled young unemployed people to regain their 1979 position relative to young people in work, the relative work chances of older unemployed people were permanently impaired. These trends relate closely to employers' recruitment rates, and suggest that changes in the type of labour sought by employers have been particularly disadvantageous for older people, especially men. Our findings do not support the idea of the emergence of an unemployed `underclass' as a general phenomenon, but prolonged high levels of unemployment in the 1990s may change the picture.

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