Posted on Wednesday 16 November 2011 by Ulster Business

Professional unemployment

Economist Maureen O’Reilly takes a look at where the increasing number of highly qualified people being forced back into the jobs market fit into Government policy on getting people back to work

“We don’t know what to do with people like you!”

That was a comment recently made to a colleague when signing up for Jobseekers Allowance (JSA) at their local Jobs and Benefits Office. The personal adviser wasn’t being unhelpful or disingenuous. They were simply highlighting yet another relatively unique feature of this recession – professional or high skilled unemployment.

“People like you” include engineers, lawyers, accountants and doctors. Over the last few years the professions have been one of the fastest growing occupations claiming JSA. In fact since spring 2008 benefit claimants among this group have increased almost fourfold in Northern Ireland to just over 2,100 people. If directors and managers along with associate professionals are included this figure rises to almost 6,300.

In relative terms the numbers are small (overall claimant count unemployment currently stands at 61,000) but the impact on these occupations are significant. Some of the most affected private sector professions include engineering, software (in spite of skill shortages in some areas), architecture, quantity surveying and law. Benefit claimants have increased 17 fold among architects, 13 fold among civil engineers and 10 fold among the legal profession.

Generally, the claimant count understates unemployment so its full extent among this group is to some degree unknown. For example, the numbers currently claiming JSA in Northern Ireland represent around 94 per cent of the overall estimated numbers unemployed here. Much of this difference can be attributed to eligibility issues in qualification for JSA, such as partner’s income. However, evidence would suggest that professionals are more likely to believe that they are not eligible for benefits particularly if they have received a redundancy package. This is despite the fact that “contributory” JSA is actually available to anyone who has worked in the last two years regardless of savings or any redundancy payment received. It is also a matter for debate as to whether, regardless of issues around eligibility, the professions are less likely to claim benefits because of the stigma attached to “signing on”.

However, the unemployment numbers paint only part of the picture.
Underemployment and self employment are also important issues here.

Underemployment involves people working in jobs where their skills are underutilised or where they are working fewer hours than they would like. It is very difficult to identify those individuals who are working in jobs where their skills are underutilised. This is to a large extent “invisible” although anecdotal evidence would suggest that this has become more prevalent among some professions. There is much more visibility however around those working fewer hours than they would wish. In this regard, professional occupations would appear to have been most affected. Since 2007 the proportion of those in professional occupations working part-time has doubled, up from 9 per cent to 18 per cent. Of course not all of this can be attributed to underemployment but it is likely to be a key contributory factor.

Necessity entrepreneurship is another tangible outcome of recession. People are effectively “pushed” into self employment because they have no other choice. There can be strong positives to this as it can provide the motivation to develop a latent business idea. Indeed many of today’s most successful businesses started out of necessity. And it can also be an important bridge between jobs. Evidence would suggest that many in this situation do end up back in employment when the economy picks up.

However, self employment can also be a form of hidden unemployment. It is an established fact that during recession self employed earnings are more likely to deteriorate compared to those in a job. It is also much more difficult for the self employed to qualify for unemployment related benefits because they pay Class 2 national insurance contributions.

The professions currently account for around 15 per cent of the self employed in Northern Ireland. Recent changes in occupational definitions mean that it is not possible to assess the overall scale of change in self employment since the recession took hold.

However, the Local Enterprise Agency network across Northern Ireland does have very direct experience of the background of individuals coming through their various start-up programmes. This includes the self employment option of Steps to Work, a government programme providing work-related options to help the unemployed/inactive back into employment. Kenny Rodgers of East Belfast Enterprise (EBE) has noted a relatively significant increase in the number of architects, surveyors, software professionals etc., setting up in business through these programmes. He estimates that the professions now account for around 20 per cent of EBE’s client base. Some of these individuals start their business in their related sector or occupation, but others have used their situation as an opportunity to develop a completely new business idea.

The changing composition of participants in the wider Steps to Work programme has also been noted. North City Training is responsible for Steps to Work in South and East Belfast. Liam McNeill, Director of North City Training, has also observed a change in the profile of individuals taking part in their programmes over the last couple of years. Again this has included solicitors, accountants and architects among others. He estimates that the numbers participating on their programmes from the professions increased by up to 10 per cent over the last couple of years.

There is an argument that professionals should not receive targeted Government support because they already have the skills, networks and in certain instances financial means to find their own way back into work. The counter argument to this is that they are just as likely to require support in job search techniques and also in identifying how they can transfer their skills into new occupations or sectors. The latter certainly seems the more accepted view from discussions undertaken in writing this article.

But it is difficult to avoid being generic when it comes to providing wide ranging support for the unemployed. Steps to Work does aim to offer personalised help and guidance with as much flexibility as possible. The problem is that the resources simply don’t exist to provide completely tailored support to individuals. It is not surprising therefore that one recent study concluded that support for unemployed professionals tended to be more fragmented and less rigorous than for other unemployed groups.

There have been attempts by government to directly target unemployed professionals. In 2008 Jobcentre Plus formalised their relationship with the private recruitment industry to help newly unemployed professionals back to work. In fact one of the Labour government’s objectives prior to leaving government was to actually increase the support to professionals from private recruitment agencies. There has also been a growing impetus around “self help” with the establishment of independent job clubs in England providing networking and support for professionals among others.

There are sectors in Northern Ireland which are expanding. Cathy McCorry, Managing Director of Grafton Employment Group, has noted recruitment activity increase in areas such as IT, pharmaceuticals and electronic engineering over recent months. However, there are actually skill shortages in these sectors. She comments that “those who have previously gained experience in the declining sectors will have to re-train for a different field of work to gain new employment in the emerging and growing sectors”. In her view this may mean starting all over again for some professions.

Without doubt young people, the unskilled and long-term unemployed have borne the brunt of this recession. Resources should of course be largely targeted towards these groups. But it may take only limited additional resources or even a reorganisation of existing resources to more effectively tailor support towards highly skilled individuals.

This will have obvious benefits to both the individual and the wider economy in terms of the application of their skills to new industries and opportunities. Perhaps this should be another agenda item for the policy debate around “rebuilding and rebalancing” the Northern Ireland economy!

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