Rising unemployment tests Britain's stiff upper lip

Not for 30 years has the British stiff upper lip been so sorely tried. The latest jump in national unemployment, to 10 percent of the work force, is grim news for Margaret Thatcher's government, for the big industrial cities of the Midlands and the North, and for Britain's NATO allies, worried at London's long-term ability to keep up a strong defense against the Soviet Union.

Yet, for all the personal and national implications of the latest figure -- 2 ,419,452 people registered as out of work in January, a figure that has now risen steadily for each of the last eight months -- the overall impact here is not as bad as it might seem from the outside.

Many British people are upset at seeing their own country running a higher unemployment rate than the US (7.4 percent), France (8 percent), and West Germany (4.6 percent).

Yet the issue is not just economic: It is social and political as well. And on all three fronts, Prime Minister Margaret Thatcher is currently doing better than many could have imagined.

The dominating questions now are how long she can hang onto her monetary policies, whether the dismal economic indicators will reverse soon, and whether she will then be able to pump more North Sea oil revenues into the economy and bring the relief the country so badly needs.

On the economic front, the January figure is cushioned by several significant factors, both British government officials and foreign observers point out. The depth and range of the cushions are not always understood even by the British themselves.

* The level of unemployment benefits, especially in the first six and 12 months after losing a job, is high. A large proportion of British unemployed have been jobless for less than a year, because many people move in and out of work periodically. Officials in the Department of Employment told the Monitor that the number leaving the jobless register every month in 1980 was more than a quarter of a million. Some of them retired, but many found other jobs.

Officials provided the following example: A married blue- collar worker with two children earning about L115 ($276) a week loses his job. He immediately qualifies for "redundancy" (severance) pay, a flat unemployment benefit of L150 ($360) a month, an "earnings related benefit" of L56 ($134) a month, an income tax rebate of L30 to L40 ($72 to $96) a month, a rent rebate on his council (public) housing of L10 ($24) a month, and free school meals for the children worth L7 ($16.80) a week.

After six months, he loses his "earnings related benefit" but picks up almost the same sum in a "supplementary benefit" (subject to a means test). That supplementary benefit entitles him to free milk, and money for school uniforms.

Given that someone out of work saves on train fares to and from the office or factory and on other items, and also given that a man or woman receives the various benefits regardless whether his spouse is working or not, an average blue- collar worker can end up earning more than 60 percent of his basic pay before he lost his job.

"For a man on a low-paying blue-collar job," observes one British friend drily, "it almost pays to be fired."

* Large numbers of people work either full or part time for themselves on the so-called "black economy." They include plumbers, electricians, carpenters, gypsy cab drivers, and others who take only cash to avoid the generally detested 15 percent VAT (value added tax).

* The slowdown in the inflation rate (Mrs. Thatcher's primary goal) and the high wage increases of last year meant that real incomes grew faster in Britain than consumer spending in 1980 -- a statistic sometimes lost sight of in the general clamor of bad economic news here.

In the fourth quarter last year, consumer spending rose to a record level in real terms -- L17.9 billion ($42.9 billion) -- 1 percent higher than the previous quarter.

There also seems to be a lot of support from the man in the street, at least in southern England, for Mrs. Thatcher's view that Britain must go through a period of economic travail to end serious overmanning in many parts of industry. Ahead lies the micro-chip revolution already a fact in the US, which will force even more streamlining and readjustments.