Examine The Unemployment Rate In Liverpoo (2) Essay, Research Paper
The volatile dynamics of the capitalist market causes fluctuations in economies of all scales; from international and national markets to local companies and communities. The spatial concentration of business activities within the boundaries of cities makes them especially susceptible to these imperfections and thus, all cities experience periods of relative growth and decline. However, the 1980s signalled the onset of the most serious and prolonged downturn in the economies of these cities since the Second World War, and nowhere was this more severely felt than in the city of Liverpool. HISTORICAL SYNOPSIS The traditional date for the foundation of Liverpool is 1207; the year the area was made a Borough by King John. However, it was not until 1600, and the development of Liverpool’s rivalry with neighbouring Chester, that any indication of the areas future economic success could be perceived. The rivalry between these two ports (Chester being the most established) emerged as a result of the financial incentives offered by the expansive trade networks of the time. Fortunately for Liverpool, the changing nature of this trade ensured the city’s development into one of the most important ports in Britain; albeit at the expense of Chester. The fundamental reason for its growth was the economic success of its rapidly industrialising hinterland, in particular the city of Manchester. The interdependent relationship that emerged between these two cities was vital to the development of them both; Manchester needed an expanding market for its textiles industry and the port of Liverpool needed a commodity to further extend its trading network. The export of these textiles to North America and India was added to the already established trade of sugar, tobacco and indigo imports from the Caribbean and a variety of goods with Ireland. By 1857 Liverpool was handling one third of all UK imports and 45 per cent of all exports, constituting a value of £55 million (Gould and Hodgkiss, 1982). The emergence of the lucrative slave trade, and Liverpool’s dominant role within it, further consolidated the ports position as the “gateway of the Empire”. The extension of these trading activities provided Liverpool with sufficient economic impetus to facilitate further growth and it did not take long before shipbuilding and other port related industries were contributing to the cumulative development of the port. This economic expansion acted as a catalyst for rapid population growth and urban sprawl in the eighteenth century; the wealthy merchants who had settled in the south of the city providing a sharp contrast to the squalor of the labouring poor who had flooded into the north. The distinction between rich and poor was amplified by the arrival of 580,000 Irish migrants in the nineteenth century. This influx of migrants approximately doubled the ports population, resulting in overcrowding, disease and high mortality rates. However, the majority of these migrants sailed for the Americas, in the process contributing to the growth and vitality of the port. The vast increase in population that Liverpool experienced during this period inevitably led to an abundance of unskilled labour that was to dramatically alter the employment patterns of the port; casual labour and a system whereby workers were employed by the half-day and could be hired/fired according to demand predominated (Gould and Hodgkiss, 1982). This downgrading of workers rights within Liverpool occurred at the same time as Britain was downgraded within the old international division of labour. This changing role for Britain signalled the end of Liverpool’s boom period and the start of economic decline. The advent of World War One momentarily reversed this decline but the inter-war depression and the global economic recession soon confirmed Liverpool, and Britain’s, faltering position within the emerging new international division of labour. As Britains position as the leading manufacturing economy changed, the volume of exports handled by Liverpool significantly reduced. The cotton industry that had acted as the foundations on which Liverpool’s growth had been built was in decline, as a result of cheaper fabrics available from India and America, and the recession meant that protectionist policies reduced the volume of imports. This combination of factors led to the collapse of the ports economy and heralded the end of an era for Liverpool. The city’s rapid decline was alleviated after the Second World War when boom conditions led to new rounds of investment occurring in Liverpool, and manufacturing emerged as the mainstay of the local economy. This investment took place mainly in new industries such as consumer goods, motor vehicles and components and was dominated by a growing force on the world economic stage, the Multi-National Corporation (MNC). In addition to the changing emphasis of industry (away from the port) this period of growth also saw the decentralisation of industry and suburbanisation of population towards the periphery. The first oil-crisis of 1973 signalled the end of these post-war rounds of investment and the resurgence of Liverpools degeneration. The second oil-crises of 1978/79 accentuated this decline and, by 1983, Liverpool had reached a previously unparalleled level of social and economic deprivation. RECENT UNEMPLOYMENT TRENDS This deprivation is most evident if we examine the changing unemployment record of Liverpool over recent years (Appendix, figure 1 and 2). This graph and table shows how unemployment has changed in a variety of UK cities between January 1983 and July 1993 and how this compares to the UK average. The unemployment figures from 1984 onwards are based upon the new travel-to-work area (calculated around local authority electoral ward data), whilst those prior to this date are calculated on the old travel-to-work area (based upon postcode sectors – for more information regarding the travel-to-work area see Appendix, figure 3). A number of other cities are shown on the graph (Appendix, figure 1) as a comparison for Liverpool. These cities have been chosen to show how the spatial positioning of a city within the UK may have affected its unemployment rates and it is for this reason that a city from the north (Manchester), a city from the midlands (Birmingham) and a city from the south (Bristol) have all been included (Appendix, figure 4 and 5 for maps showing the position of Liverpool and these other cities within Europe and the UK). The city of Manchester was also included on the graph since it is part of Liverpool’s hinterland and was vital to the development of the port in the eighteenth century, whilst Bristol has been included due to its similar historical background. The most noticeable trend displayed by this graph (Appendix, figure 1) is the similarity between all the different cities plights and the UK average. For although each city has a varying degree of unemployment, the general patterns displayed by the graph mirror one another. Relative to their own trends over the period graphed, each city starts high, peaks in January 1986 (1/86), troughs in July 1990 (7/9) and begins to climb again up to January 1993 (1/93). The only exception to this pattern is the UK average which peaks in January 1985, one year earlier than the cities. Another interesting trend exhibited by this graph is that all of the cities classified as “northern” (ie. those north of a line running from the Severn Estuary to the Wash – Liverpool, Manchester and Birmingham) are all above the UK average unemployment rate for the entire ten year period. However, Bristol (a southern city by the above definition) is lower than the UK average by at least 1 per cent (Appendix, figure 2), up to January 1991. At this point their lines cross, so that by July 1993 all the cities on the graph have unemployment rates higher than the UK average. This graphical evidence is important if we are to consider the relevance of the current debate concerning the North/South divide and its impact on the socio-economic fabric of the region. The graph (Appendix, figure 1) clearly shows the extent of unemployment within Liverpool. The unemployment rate in this city is far greater than that exhibited by any of the other cities on the graph or the UK average. In fact, in Liverpool’s peak year (January 1986) the unemployment rate was 9 per cent above the UK average, at a rate of 21.3 per cent (Appendix, figure 2). The closest Liverpool ever gets to the UK average is 6 per cent in July 1984 and this is not because its unemployment level has come down, rather it is because the UK average has risen to one of its highest levels (12.8 per cent). Throughout the whole of the ten year period covered by this graph, Liverpool remains at least 3 per cent above its closest rival, Birmingham. This city had a peak value of 16.7 per cent, a further 2 per cent above Manchester and 5 per cent above Bristol. It is interesting to note the “second-place” status of Birmingham in the graph and the emphasis it once placed, like Liverpool, on a strong manufacturing based economy. The second graph and table (Appendix, figure 6 and 7) shows how unemployment has varied between the sexes over the period January 1983 to July 1993. As expected the “total” line matches the general trend for Liverpool and the UK average, as shown in figure 1, very closely. So too, do the male and female unemployment trends; they both peak in January 1986 and trough in July 1990. However, what is most interesting about this graph is the relative consistency of unemployment figures for females in Liverpool. Whereas male unemployment increased in the period July 1990 to January 1993, from 46,631 to 59,313, female unemployment remained at a consistently low level, increasing by only 1,186 over the same period. For unemployment to remain at such a consistently low level, some job opportunities must have been given, and taken, by the female population of Liverpool. The “reliable” nature of these jobs, within a volatile market, suggests that they are within a sector/industry that is presently stable, or has rationalised its activities, and this, in turn, suggests them to be part-time opportunities. The final outstanding feature of this graph (Appendix, figure 6) is the dramatic rise in unemployment figures in the six month period between July 1984 and January 1985. In this short period male unemployment increased by 11,386, from 66,513 to 77,899, and female unemployment increased by 5,637, from 23,428 to 29,065 (Appendix, figure 7). There is no one reason that explains the scale of this increase, rather it is the result of the general economic slump that the UK was experiencing reducing the demand for goods produced by industries in Liverpool. The spatial distribution of this mass unemployment can be seen in figure 8 (Appendix). This map shows how the average unemployment rate has changed within the Parliamentary Constituencies of Liverpool between January 1985 and January 1993 (data prior to January 1985 was unavailable). The most striking feature about this map is the presence of the traditional north/south divide within Liverpool. The constituencies with the highest rates of unemployment in both 1985 and 1993 are situated in the north of the city; an area traditionally settled by dock-workers. Riverside has the highest figures over the period shown by the map, 28 per cent in 1985 (4.2 per cent above the UK average) and 27 per cent in 1993 (6.1 per cent above the UK average). Its consistently high rate of unemployment reflects the rationalisation of the ports activities and the relative unskilled and semi-skilled nature of its population. The south of Liverpool is the area traditionally settled by wealthy merchants and, because of this, offers a higher standard of living to its residents. The relative affluence of the south is reflected in the lower unemployment rates for its Parliamentary constituencies; Garston maintaining a figure of 16 per cent between 1985 and 1993. However, although the overall figures for the south have remained lower than those in the north it is noticeable that the trends exhibited by these areas are markedly different. Whereas the unemployment rates in constituencies such as Riverside, Walton and West Derby have reduced from their 1985 total, those constituencies in the south have either remained the same (as with Garston) or have increased (Mossley Hill increased from 18 per cent in 1985 to 20 per cent in 1993). These trends reflect the growing importance being placed on the regeneration of the “run-down” areas in the north at the expense of the established areas in the south of the city. RECENT INFLUENCES AND URBAN POLICIES One of the fundamental reasons for Liverpool’s exceptionally high unemployment problem is the impact the recession and the internationalisation of production activities have had on the manufacturing industry. Unfortunately for Liverpool, its reliance on a narrow based economy made it especially vulnerable to the sweeping changes that were, and still are, taking place within the national and world economy. In 1984 Merseyside County Council realised the size of the cities problem when it categorised employment prospects by standard industrial classification (Appendix, figure 9). The table showed how the majority of industries that constituted Liverpool’s economy were subject to a “possible severe decline” in their future employment figures. The industries that the report highlighted were fundamentally manufacturing based and included mechanical engineering, electrical engineering, shipbuilding and vehicles. By the late-1980s the County Council’s fears had been realised. The manufacturing sectors that their report had featured were all experiencing a decline that was forcing them to rationalise and reorganise their production activities. This resulted in a number of major job losses from the manufacturing industry throughout the 1980s, especially from Ford at Halewood (1300 in 1983) and Glaxo in Speke (450 in 1986/7) (Appendix, figure 10). These redundancies were the result of the companies attempts to improve productivity and remain competitive within the volatile world market. In doing so, strategies such as increased automation, standardisation and the use of a flexible workforce were implemented, inevitably resulting in a reduction in the companies employment. The growing pressures to remain economically viable led to industries decentralising and internationalising their business activities, worsening the crisis in the inner cities. The time-space convergence that caused this internationalisation also provoked companies, usually Multi-National Corporations, to relocate their entire branch-plant production activities overseas. This meant that they were able to utilise cheap labour and gain access to otherwise prohibited markets; in the process removing, not reducing, an important source of large-scale employment. However, not all of the redundancies experienced in Liverpool were the result of the internationalisation and rationalisation of production. Many of these redundancies occurred because of a change in governmental initiative; manufacturing, which used to be the mainstay of the UK’s economy in the twentieth century, being gradually phased out and the service sector being nurtured to take its place. It was this “modernisation” of the UK’s economy and the extent of its deindustrialisation that caused the emergence of a North/South divide that reiterated the socio-economic plight of Liverpool. The severity of Liverpool, and other cities, situations forced the local and central government to implement some policies in the hope of alleviating, or at least slowing down, their decline. The response they decided upon was far removed from the “social pathology” and welfare approach, adopted in the 1960s as a result of the race riots; this was now seen as “essentially backward looking, seeking to compensate the past rather than shape a better future” (Solesbury, 1993). This “culture of poverty thesis” (Lawless, 1981) was replaced by the Inner Urban Areas Act (1978). This Act used the findings from the 1977 Policy for Inner Cities White paper as evidence of official concern for employment opportunities within cities. This marked a significant change in the Urban Programme, from the piecemeal funding of social facilities in the 1960/70s, to a strategy bent on economic regeneration via private partnerships in the 1980s. This was seen by Harvey (1989 – from Meegan, 1992) as a shift from “urban managerialism” to “urban entrepreneurialism”. The prevailing purpose of adjusting these policies was “to compensate the cities for the demographic and economic misfortune they had suffered” (Solesbury, 1993) by privileging and invigorating local markets. The first indication Liverpool had of this renewed strategy was in 1981 when a series of Enterprise Zones were established in peripheral areas of the city (eg. Speke), by the local government. These zones were initiated in the hope that the reduced industrial burdens (ie. taxation and rates) that they offered would encourage the location of new companies and begin to reduce the cities high unemployment rate. Their provision was also intended to act as a catalyst for growth in adjacent areas; the deregulation and expenditure on infrastructure setting new standards and providing a competitive stimulus for other localities. However, rather than attracting new industries and jobs, the incentives offered by the Enterprise Zones caused the relocation of established inner city industries. This decentralisation occurred because of the increasing costs of the city, the decreasing cost of transportation and the increasing size of the market; all factors that made the highly accessible and deregulated nature of the zones appealing. Thus, in inadvertently promoting the decentralisation of industry, the Enterprise Zones facilitated the further economic decline of an already severely hit part of the city. In the same year that the Enterprise Zones were established, the first two Urban Development Corporations were created by the central government, including one on Merseyside (MDC). The central aim of the MDC was the regeneration of an urban area via an attempt at “urban entrepreneurialism”. This meant that a selected body was granted direct central government funds, to be used for land purchase/reclamation, and Local Authority planning powers to be used within its designated area. The development of any infrastructure or provisions within this area were subsequently to be utilised as a means of levering private capital into the area. The most successful public/private financed venture undertaken by the MDC is the development of the Albert Dock. This complex entertains over six million visitors a year and is claimed to be the second largest tourist attraction in the UK (Meegan, 1992); Liverpool City Council refer to it as “the spearhead of a booming tourist industry” (1992). The MDC also concentrates on promoting spectacles such as the Garden Festival (1984) and the Tall Ships Race (1992) in a continued effort to attract tourists to the city; thereby securing the physical regeneration of their designated area. Although it has been successful in attracting tourists to the city, the Merseyside Development Corporation has failed in its overall objective to revitalise Liverpool’s stagnating economy. Its fundamental strategy was to use public funds as a means of provoking greater investment from the private sector; in the process creating much needed job opportunities. However, the MDC failed to induce the amount of private investment required; for every £1 of public money invested, only 90 pence was invested by the private sector (Meegan, 1993). This has meant that the employment opportunities promised by the MDC have been few and far between. A further problem with the MDC is that its general strategy for economic revitalisation failed to take in to account the very nature of the city it is working in. Traditionally a manufacturing based economy, Liverpool needs a development plan that is aimed at the heart of its unemployment problem. However, in targeting the tourism industry the MDC has created jobs in the service sector that the majority of unemployed are unqualified for; partially explaining why the total unemployment rate for Liverpool remained so high in the early 1980s (Appendix, figure 6). The service sector jobs that have been created as a result of the MDC’s efforts, have provided opportunities for unskilled females. The success of the tourist industry has caused “hotels to be running at 75 per cent capacity” (Liverpool City Council, 1992) and, since this is a traditional area of female employment, part-time positions are abundant. This expansion of ‘openings’ for females may explain the recent stability in their unemployment figures (Appendix, figure 6). These emerging skill shortages were interpreted by central and local government as the fundamental reason for high unemployment rates and it was this ‘realisation’ that led to a number of training initiatives being implemented in the mid-1980s. These programmes signalled a shift in emphasis, away from urban regeneration and towards ’supply-side’ policies (Begg, Fischer, Dornbush, 1984). In 1985 the Department of Employment established City Action Teams that targeted and trained unemployed Asian youths; in 1986 the Department of Trade and Industry founded Task Forces that endeavoured to reverse the decline of inner-city areas such as Granby, in Liverpool; and in 1988 the Department of Employment founded the Training and Enterprise Councils (TECs) that took control of the responsibilities previously handled by the Manpower Services Commission. The TECs aim is to provide the unemployed with a variety of skills that relate to the varying demands of the labour market. In doing this they are provided with funds from the Local Education Authority to help in the promotion of vocational training and enterprise support schemes. By training people in this manner they are providing the unemployed with skills that can then be matched to the needs of the employers that the TECs are linked with. This initiative has the potential to temporarily reduce the number of people unemployed in Liverpool and other UK cities, but its long-term impact on the future economies of these cities is debateable. Although training people for specific vacancies gives them a job (and hence removes them from the UK’s total unemployment figure), these jobs are likely to be in a semi-skilled position that is not conducive to a consistently strong economy. Merseyside County Council has attempted to alleviate these inevitable shortcomings in the national initiatives, by funding a number of their own ventures at a local level. The formation of organisations such as Merseyside Education, Training and Enterprise Ltd (METEL), the Unemployed Resource Centre and the Womens Technology Centre are all attempts to improve the participation of Liverpudlians in the growing high-technology and service sector markets. However, the results of these initiatives are unlikely to dramatically alter the unemployment trends for Liverpool as a whole, since both of these industries are capital, rather than labour, intensive. The most recent central government urban regeneration initiative, to be implemented within Liverpool, is the City Challenge programme. This programme encourages cities to compete for regeneration funds, that they were previously given automatically, with the city showing the most private sector investment interest and innovative development plans obtaining the capital. As with the Urban Development Corporations (1981) the principle behind City Challenge is “that the evidence of the progress on the ground will act as a catalyst in leveraging more investment [into the city centre] from both the private and other public sector agencies” (Liverpool City Challenge, 1993). However, unlike the Urban Development Corporations, City Challenge attempts to integrate the whole community into the regeneration brief. By establishing a “Partnership Forum” and “Executive”, the programme draws together representatives from the public, private and voluntary sectors, “in the hope that the needs of the whole community are catered for” (Liverpool City Challenge, 1993). The result of this “working partnership” (Liverpool City Challenge, 1993) is that the regeneration and revitalisation of the targeted area has begun, in an attempt to improve the infrastructure and image of the site and encourage outside investment and relocation of businesses. For the local unemployed this means that opportunities in the construction industry are going to be rife for the duration of the programme and “where skill gaps are identified, Merseyside TEC will provide customised training courses” (Liverpool City Challenge, 1993). This represents an important step by Central government, combining and coordinating its urban regeneration and supply-side policies to provide a better future. However, although the construction industry offers immediate employment opportunities, what happens when the programme comes to an end in 1997? The best City Challenge can offer the unemployed is ‘temporary’ employment in a semi-skilled industry that is not conducive to a strong and stable local economy or a reversal of fortunes. The revitalisation of the designated area is a concerted attempt to sufficiently improve its image and attract outside businesses that will ensure the city’s economic survival, but will these companies actually locate their premises in a city centre when the periphery offers cheaper and more accessible land? If they do, have the unemployed people of Liverpool got the skills that suit these new industries, or are more qualified personnel going to be hired who commute in? And if they don’t, have the local government got the finances and patience needed to maintain the areas contemporary image? All of these questions have yet to be answered, with the innovative programme being only one-fifth complete. However, it does seem that in regenerating the urban fabric of Liverpool the City Challenge programme will be successful (it is due to be completed in 1997), but in revitalising the city’s economic future, only the short-term can be guaranteed. CONCLUSION The past decade has seen a variety of central and local government policy initiatives that have attempted to reverse the social and economic decline of the old industrial cities. These policies have been biased towards the regeneration of infrastructure and the provision of services, in the hope that new growth industries will relocate their activities. This ‘hopeful’ strategy has had little impact on the unemployment problem experienced by these cities; Margaret Thatcher commented the day after the 1987 election (ten years after the Policy for the Inner Cities White paper), “we’ve got a big job to do on Monday in some of those inner cities” (Lovering, 1993); and six years later, that job is still there to be done. The reason that these general policies, from both the local and the central government, have had little impact on the severity of the problem, is because they fail to address Liverpool’s fundamental problem; its growing peripherality. In its heyday Liverpool was at the geographic centre of trade between the UK and the USA, now, with the emphasis of trade being firmly placed in Europe, it is finding itself becoming an increasingly peripheral city (Appendix, figure 11); its new status being confirmed by its socio-economic deprivation and reiterated by the EC’s classification of 38th most impoverished region in 1987 (Meegan, 1993). However, the recent opening of the Channel Tunnel has provided Liverpool (and the rest of the north) with an opportunity to reduce their peripherality. If a high speed rail link between Liverpool and the Channel Tunnel could be established (since it is on a main British Rail line – Appendix, figure 12), it would provide the city, and the region, with access to the whole of Europe. In this country, rail freight is currently the most under-used form of transporting goods; offering a cheapness and speed not provided by the road. If this tunnel link was established, and the freeport was successful, Liverpool could be used as a container base/warehouse for goods, that could then be ferried by the rail system throughout the UK and Europe; once again making Liverpool an integral part of the UK’s economy. The development of Speke airport would also serve a similar function. At present no UK airport monopolises internal flights, (Appendix, figure 13); Speke airport could therefore be developed to fill this vacant role, serving all the major airports within the UK and eventually the business capitals of Europe. As with the development of the rail-link, this would reduce Liverpool, and the norths, peripherality, at the same time promoting the “new high-tech” image that the local and central governments have invested heavily in. These two initiatives may, if realised, reduce some of the socio-economic problems within Liverpool by reducing its national and international peripherality and establishing the potential for sustained economic growth. By increasing the strength of its ties to the UK and the EC, Liverpool will be creating an environment whereby the capital already invested in programmes implemented by central and local government will provide the city with an edge that may see it set for the future.Bibliography Begg, Fischer, Dornbush – “Economics” – Second Edition – 1984 Champion, AG and Townsend, AR – “Contemporary Britain” – Edward Arnold – 1991 Gould, W and Hodgkiss, A (eds.) – “The Resources of Merseyside” – Liverpool – 1982 Lawless, P – “Britains Inner Cities: Problems and Policies” – First Edition – London – 1981 Liverpool City Challenge – “Liverpool City Centre East Action Plan 1993/94″ Liverpool City Council – “Economic Development Plan 1992/93″ Lloyd, P and Shutt, J – “Recession and restructuring in the North-West region, 1975-82: the implications of recent events” Lovering, J – Lecture delivered at The University of Liverpool on the 6th of December, 1993 Meegan, R – Lectures delivered at The University of Liverpool on the 11th and 21st of January, 1993 Meegan, R – “Liverpool – Sliding down the urban hierarchy: from Imperial pre-eminence to global and national peripherality” – 1992 Merseyside County Council – “Merseyside County Employment Prospects to 1990/91″ – 1984 Merseyside Planning Department – “Agenda for Merseyside” – 1985 Solesbury, W – “Reframing Urban Policy” – from “Policy and Politics”, vol.21, no.1, January 1993