Any government would be pleased with today’s labour market figures, but it is possible to claim too much for them, writes Richard Exell.
The unemployment rate was down 0.1, to 7.7 per cent, with the unemployment level down 37,000; the number of people claiming Jobseeker’s Allowance is down 12,100.
The number of people who have been unemployed more than six months is down 46,000 and the number unemployed more than 12 months is down 5,000.
There are 494,000 job vacancies, the highest level since the end of 2008, up 10,000 on the quarter and the number of unemployed people per job vacancy has come down from 5.3 to 5.1.
At 71.4 per cent, the employment level is the highest ever and the employment rate is the highest since the first three months 2009 – though we still have a little way to go before we return to the 73.0 per cent we achieved a number of times in early 2008.
These are positive figures and in previous recent posts I have emphasised the fact there is a real increase in employment, as illustrated by the figures for actual weekly hours worked: up 0.8 per cent on the quarter, 2.3 per cent over the past 12 months.
There are some less positive results, however, that may hint this positive trend will go into reverse.
Youth unemployment is unchanged on the quarter, but up 12,000 from last month’s figure and the 37,000 fall in unemployment was entirely accounted for by men – women’s unemployment was the same as it had been in the previous quarter and was up 4,000 from last month.
In particular, the number of redundancies rose for the second month running:
Note this graph does not include the post-Christmas retail redundancies of the past few weeks; nonetheless, the overall figures are very good, and take some explaining, given the stagnation of GDP.
As I indicated at the start of the year, my favoured explanation is what is happening to pay – in the three months to November, average weekly earnings (total pay) for the whole economy were just 1.5 per cent up on the year, down from 1.8 per cent the previous month.
This was well below CPI inflation, 2.7 per cent that month, and half the RPI, which was 3.0 per cent – and the Office for Budget Responsibility expects real earnings to be even worse this year:
Falling real pay means companies that would otherwise be forced to make workers redundant find it easier to keep them and encourages employers to substitute labour for capital. This is preferable to rising unemployment, but it is not a basis for economic growth.
Average weekly earnings have stagnated since April, which means that, unless there is some improvement, the figures for April 2013 will show the annual increase falling to zero.
See Table 1:
The other factor explaining the growth of employment is the expansion of “atypical” employment (including part-time, temporary and self-employment). I don’t want to overstate this, because there is a real growth in full-time employee jobs, accounting for 91 per cent of the employment growth in the latest quarter.
All the same, the 552,000 headline increase in employment over the past 12 months cannot be accepted at face value:
• Part-time workers account for 43 per cent of this increase (compared to 27 per cent of the workforce);
• Temporary workers account for 18 per cent of the increase (compared to 6 per cent of the workforce);
• Self-employed workers account for 16 per cent of the increase (compared to 14 per cent of the workforce);
• The expansion of government employment and training programmes accounts for 12 per cent of the increase. (These figures overlap, so don’t add them up.)
At the TUC we have pointed out that, since the start of the recession, self-employment has accounted for most of the increase in employment (in the latest figures, the number of employees has fallen 227,000 since January to March 2008, while the number self-employed has risen 345,000).
There have been large increases in the number of self-employed people in some occupational groups, including a 131,000 increase in the number of self-employed people classified as working in professional occupations since 2008. This suggests a large increase in the numbers setting up as consultants.
See Table 2:
In addition, we should remember that the number of people who say they are working in temporary jobs because they couldn’t get permanent ones has risen by 61,000 and the number working part-time because they couldn’t get full-time jobs by 73,000.
Any government would be pleased with today’s figures, but it is possible to claim too much for them.
• The labour market in 2013 – what’s in store? – January 4th, 2013