Labour pains

The UK labour market has shown surprising flexibility, which should help during a recovery.

Today British Airways announced that it was asking workers to work for free, or take unpaid leave, in a bid to cut costs. Other companies are doing the same: for example, business services firm KPMG recently asked staff to consider unpaid leave and Honda shut down factories for months.

This helps businesses retain skilled employees during the downturn, but simultaneously reduces their wage bills. Not all businesses have had that luxury - many have made staff redundant, or closed completely.

The appetite amongst workers for such schemes underlines the flexibility within the UK labour market, in contrast to previous recessions and more rigid labour markets elsewhere. And retaining skilled workers mean gearing up for a recovery should be easier, quicker and less costly for business than letting staff go.

New unemployment figures are out tomorrow. They are likely to show another jump in the number of people looking for work. It'll be scant consolation for the newly unemployed that the situation could be much worse.