Wednesday, 17 July 2013

Rise in full-time employment and hours plus lower jobless rate is good news for UK labour market, though signs of underlying weakness remain

I’ve had a quick look at the latest labour market statistics from the Office for National Statistics, mostly covering the quarter March-May 2013. These are overall a good set of jobs figures, with the positives on balance stronger than the negatives. Employment is up by 16,000 on the quarter (though, alongside population growth, not by enough to prevent a fall of 0.1 percentage points in the employment rate) and unemployment has fallen on both the Labour Force Survey (down 57,000) and JSA benefit count measures (down 21,200 between May and June). The unemployment rate fell by 0.2 percentage points to 7.8%.

The best news of all is a strong quarterly rise in full-time employment of 28,000 and increased working hours (the number of people in part-time employment fell by 12,000). Alongside a fall in temporary employment (down 15,000) and self-employment (down 28,000), fewer redundancies (down 19,000) and more job vacancies (up 24,000), this suggests that confidence is returning to the jobs market with employers cutting back on contract workers in favour of permanent staff.

Overall women have again fared better than men in the latest quarter (14,000 more in work and 41,000 fewer unemployed, the corresponding figures for men being 2,000 and 16,000) and there has been a welcome fall in youth unemployment (down 20,000 for the 16-24 year age group as a whole although this is almost entirely due to a fall in the number of young people in full-time education seeking work – the number of young people in work actually fell by 31,000 on the quarter).

Less welcome is news that long-term unemployment is continuing to rise (up 15,000 on the quarter to a 17 year high of 915,000) and that the number of people of working age who are economically inactive is also increasing (up 87,000, though again this is partly due to fewer full-time students looking for work who are as a result classified as economically inactive rather than unemployed). Not everybody is therefore benefiting from the overall improvement in the labour market. 

Likewise, despite a slight increase to 1% in the rate of growth of regular pay, pay rises continue to lag well behind inflation (running at 2.7% on the CPI measure in the corresponding quarter), suggesting that our struggling economy is able to create more jobs only because people are desperate to price themselves into work. This is not a recipe for either economic or social well-being and should be viewed as a sign of continuing labour market malaise whatever the headline jobs and unemployment figures show. 

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