Home Business NewsOlympics Is London’s unemployment drop just an Olympic anomaly? Maybe not

Is London’s unemployment drop just an Olympic anomaly? Maybe not

16th Aug 12 11:32 am

Cynics say the big boost in London jobs will cease to exist post-Olympics. But the optimist’s counter-arguments are worth hearing too

Follow me on Twitter @sophiehobson and @LondonLovesBiz

Of the 46,000 people taken out of unemployment in the UK in the three months to June, a colossal 42,000 were Londoners, according to government figures.

Unemployment rose in The Humber, East Midlands, West Midlands and Northern Ireland, while it stayed at the same level in the South East, prompting cynics to shred the seemingly promising unemployment in the UK to 2.56 million.

But we should be happy that London has managed to buck the trend with such vigour, shouldn’t we? The critics say no. They argue that those 42,000 jobs are, for the most part, Olympics-related, so most of them will fizzle out in the near future, meaning a big wave of redundancies that will kick London (and therefore the UK) back into the unemployment doldrums.

There’s no denying that the last three months of unemployment figures in London are an anomaly. At several points in autumn last year and for the first part of this year, London held either the second or third highest unemployment rate of all UK regions. In October 2011, one in 10 working-age Londoners were unemployed. (You can find out more about why in my feature on One in 10 Londoners unemployed.)

So, yes, the longer-term trend would rightly prompt cynics to be, well, cynical about how all these jobs in London have miraculously appeared, and how long they will last.

I’d like to offer the more hopeful side of the argument too, though. A good bulk of Olympics-related jobs have been created by construction, tourism and Olympics supplier contracts. Let’s take them one by one.

There was obviously a lot of construction work needed in the run-up to the Games. But there’s a lot needed over the next few years too. We’ve got Crossrail, HS2 and the Shard to finish, the Cheesegrater, the Walkie Talkie, the Pinnacle, 150 Stratford, the Cucumber, more regeneration in East London as part of the Olympic Legacy, and a whole host of new skyscrapers still to come. That’s a fair few construction jobs.

When it comes to tourism, Olympic host cities traditionally see a drop in tourist numbers in the immediate run-up to and course of their Games. It’s too soon yet for the official figures, but tour operators are widely reporting a drop in trade, while Heathrow’s forecast for the number of visitors on the day before the Opening Ceremony was 36% too high. Many leisure and retail businesses in London, as we all know, have suffered from what looks like a drop in visitor numbers.

The (sort of) good news is that this was all expected. We won’t, so the theory goes, see the real tourism benefits of the Olympics until the Games are all done and dusted. When hotel prices et al are back to normal, the tourists will come back.

And, supposedly, we will see more tourists over the next few years than normal, because London has just been showcased to the whole world in the most glorious of ways. If that expectation comes to be, then the so-call short-term tourism jobs created by the Olympics should actually continue to exist, and hopefully become more plentiful as London’s tourism industry grows.

Next there are Olympic supplier contracts. Now, I can hardly argue that we’re going to need the same levels of lycra, volleyballs and Union Jack flags as we did in the run-up to the Olympics. But it’s worth noting that British small and medium-sized companies (half from London and the South East) won 70% of the contracts made available through the CompeteFor website (the portal that offered up all contracts needed by Olympic suppliers as well as some direct Olympic contracts). 

The boost  given by those contracts in terms of revenue and marketing prowess (“we supplied the Olympics”) should help them grow their business, hopefully creating more jobs in the months and years to come.

Of course, these are all the optimist’s arguments.  There is plenty of reason to be negative about the unemployment figures, and about London’s employment prospects post-Olympics.

But just for now, let’s look on the bright side of life, shall we?

As a sidenote, if you have two minutes spare, this BBC video with Stephanie Flanders on why GDP is shrinking even while employment figures are going up is brilliant. It also explains why the unemployment figures actually conceal even further unemployment.

Follow me on Twitter @sophiehobson and @LondonLovesBiz


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