Unemployment figures: prospects for living standards still poor as earnings growth remains slow

But the quality of jobs is improving

The latest employment data from the Office for National Statistics suggest that the recovery in the headline employment and unemployment figures may be slowing down, but the growth is now more concentrated in full-time employee jobs and pay is at last picking up.

All this is both welcome and overdue, but there is a long way to go and there are inequalities that still haven’t been addressed – youth unemployment, in particular, remains too high.

Let’s start with a look at the news we can welcome without any cautions.

First, in the three month period from September to November there were 30,801,000 people in employment, another record. The employment level is 512,000 higher than it was a year previously, the tenth successive month with a year-on-year increase of over half a million.

Second, the provisional figure for the number of vacancies in Oct-Dec is 700,000, the highest number since 2001, when these data began being collected. My favourite labour market statistic, the number of unemployed people for every job vacancy stood at 2.8 in Sep-Nov, down from 2.9 in Jun-Aug. This is getting close to the typical pre-recession level of 2.5.

And unemployment was down 58,000 on the quarter, the 20th successive month of falling unemployment. The unemployment rate was 5.8 per cent in Sep-Nov down from 6.0 per cent in Aug-Oct; the unemployment rate has fallen two percentage points in the last two years.

But, as I noted at the start of this article, young people don’t seem to be gaining in the same way. In the last three months, youth unemployment has actually risen by more than 30,000:

What may be even more politically significant is the fact that the recovery seems to be slowing down. In the first eight months of 2014, employment levels were more than two percentage points higher than they had been a year previously, but for three months the rate of improvement has been less than it was the previous month:

Growth employment

The employment level is rising at much the same pace as the working age population, and the employment rate is therefore unchanged, at 73.0 per cent for the fourth month running.

There is a similar story when we look at unemployment. In Jun-Aug 2014 unemployment was a fifth lower than in Jun-Aug 2013, but that rate of improvement has since slowed down:

Fall unemployment

But, just as improvements in employment and unemployment are slowing down, there does seem to be a gain in the quality of jobs.

At the TUC we have worried that a disproportionate share of the rise in employment since the end of the recession has been in ‘atypical’ jobs – part-time, temporary and in self-employment – but that is not the case in the latest figures. In the last quarter, the number of employees working full-time rose by 90,000, while the number in self-employment fell 3,000 and the number working part-time fell 4,000 (there were also falls in the numbers of unpaid family workers and people on government schemes).

The figures for involuntary atypical work were also encouraging, with the number of people in temporary jobs because they could not get permanent ones falling 39,000 and the number working part-time because they could not full-time jobs falling 32,000.

Again, if we look at the year-on-year changes we can see that the early stages of the employment recovery were fuelled by self-employment, which is now playing less of a part:

Self-employment

Indeed, a month-on-month comparison would show the number of self-employed workers falling in four of the past five months. The picture for full-time employees is not quite so clear, but there has, on the whole, been a higher level of growth over the past eight months:

Full time employees

The picture of a slowing down in the headline improvements is rounded off by what is happening to earnings. The annual increase in average weekly earnings (regular pay) based on three month averages rose to 1.8 per cent, higher than both the Retail Price Index (1.6 per cent) and the Consumer Price Index (0.5 per cent). It is worth emphasising, however, that earnings increases are still low.

Of course, it’s good that earnings are no longer falling in real terms, but that is hardly a great success and at the TUC we estimate that, at the current rate of progress, earnings won’t regain their pre-crisis value until after the 2020 election

Higher than inflation increases in earnings aren’t necessarily going to continue, unfortunately. As the Monetary Policy Committee has noticed, “around 40 per cent of pay settlements would be agreed in April when, according to the Bank’s latest estimates, twelve-month CPI inflation was likely to be around zero, so there was a risk that any pickup in pay growth might be delayed.” (Hat Tip: Duncan Weldon.) (Unions will be discussing Making Up Lost Ground on Pay at our annual Pay Forum next month).

It’s important for progressives and trades unionists to keep up with what is happening to the labour market. Rising employment being accounted for by atypical jobs was the story over a year ago; what is happening now is that the quality of jobs is improving.

But the increase in employment and fall in unemployment are slowing down. We still have a long way to go: the proportion of employment accounted for by full-time employee jobs is 62.5 per cent, significantly down on the pre-recession level of 64.6 per cent. And the prospects for living standards are still poor, for as long as earnings take this long to recover.

Richard Exell is senior policy officer at the TUC. Follow him on Twitter

10 Responses to “Unemployment figures: prospects for living standards still poor as earnings growth remains slow”

  1. sarntcrip

    THE QUALITY OF JOBS IS IMPROVING, ACCORDING TO WHO ARE THERE SUDDENLY MIRACULOUSLY LESS ZERO HOUR CONTRACTS NO WAGES ARE STILL STAGNANT FIGURES DON’T INCLUDE THOSE SANCTIONED OR REFUSED BENEFIT DUE TO CUTS LABOUR HAVE MISSED A TRICK BOTH BACKING GIDEON’S CHARTER AND FOR FAILING TO ADOPT THE VICTIMLESS ROBINHOOD TAX ALREADY WIDELY TAKEN UP IN EUROPE TORIES LEADING BY 2 ACCORDING TO YOUGOV A GUARDIAN POLL YESTERDAY PUT LABOUR AHEAD BY 3 ACCORDING TO THE PAPWORTH TRUST THERE ARE 6 MILLION WORKING AGE DISABLED OF WORKING/VOTING AGE CURRENTLY BEING IGNORE BY LABOUR A RELATIVELY SMALL PROPORTION OF THOSE COULD SWING MARGINALS LABOUR’S WAY THEY ARE BEGINNING TO LOOK LIKE THEY DON’T WANT TO WIN GODSAVE THE DISABLED FROM MORE TORY YEARS OR EVEN WORSE FROM A TORY UKIP COALITION SO SORRY CAPS LOCK ERROR

  2. Leon Wolfeson

    Earnings *might* have recovered by 2020 (possibly, I don’t believe they will), but average money avaliable to people won’t because of the benefit cuts. And we’re headed, very rapidly, for a bust. The bubble in the city won’t last.

    There’s no room for payrises outside the city in the economy.

  3. JoeDM

    Unemployment down yet again.
    Real wages up for the second month running.

    The economic tide has turned.

  4. Guest

    No, continued decline is not a “turn”. Tiny raises in income don’t even begin to negate the vast drops, let alone benefit cuts, as you rejoice in a tiny increase in employment. Low-paid employment.

    Meanwhile, we’re heading for deflation and directly into a crash in the city which will probably make the last depression look mild.

    Even the Torygraph admits there’s a problem – http://www.telegraph.co.uk/news/general-election-2015/11359133/Unemployment-is-in-freefall.-So-why-arent-we-feeling-it.html

  5. littleoddsandpieces

    The government cannot possibly know the true unemployment levels in the UK.

    People lost benefit are no longer within the unemployment figures as economically inactive.

    People over 60 are not listed within the government unemployment figures, when over half are unemployed outside of London.

    I am unemployed, below the state pension age, nil benefits, nil state pension, disabled / chronic sick and nil benefits for that. Early retired on the average works pension of 4 per cent lowest income under the massive austerity job cuts now going to rise to 2 million, when the majority will be to low waged people with nil savings and nil any other pension provision in life other than the state pension.

    The Institute of Fiscal Studies say that the 40-60 years olds today, are poorer than their parents and grandparents for the first time since the 1950s, being worse off than even a decade ago. We are getting poorer.

    And poorer still in 2016 with flat rate state pensions as lows as £55 per week, instead of the current £113.10 per week state pension plus the additional pension top up.

    Listed at £113.10 current rate as the lowest state pension of all rich nations bar poor Mexico.

    Half of the over 60s are within the working poor, trapped on wages stagnated a decade into the past and losing benefits, because welfare reform is not about getting people into work and off benefits.

    97 per cent of people on benefit are people in jobs or the poor pensioners.

    Yes poor pensioners. The 2.6 million pensioners on only the state pension or with a tiny works pension leaving them far, far below the breadline.

    The flat rate pension is the biggest con in UK history. The more expose that this is more about leaving the poor in penniless starvation for life, so spread about the information in the below as widely as you can in social media:

    https://you.38degrees.org.uk/petitions/state-pension-at-60-now

  6. Leon Wolfeson

    Still the copy/pasted rant and pro-Hamas site link? Really?

  7. Postkey

    ” The cause is austerity.”

    There appears to be more ‘austerity’ to come?

    “I can tell you today that on the Treasury’s current forecasts, £12 billion of further welfare cuts are needed in the first two years of next Parliament. That’s how to reduce the deficit without even faster cuts to government departments, or big tax rises on people.”
    https://www.gov.uk/government/speeches/new-year-economy-speech-by-the-chancellor-of-the-exchequer

    However,
    as to ‘recent’ austerity.

    “Even Britain has now abandoned austerity . . .
    And while Osborne will never publicly admit this, the big surprise of his budget is its implicit acceptance of this Keynesian view.
    Instead of trying to reduce borrowing any further or aiming for a balanced budget, as it originally promised, the British government has now accepted that deficits will keep rising in absolute terms and will still be worth 6% of GDP by the next election in 2015. That would leave Britain with by far the highest deficit ratio among the major economies after five years of unprecedented austerity. . . .
    We are still looking at borrowing of £108 billion this year – nearly £50 billion more than planned back in 2010.”

    http://blogs.reuters.com/anatole-kaletsky/2013/03/21/even-britain-has-now-abandoned-austerity/

  8. Leon Wolfeson

    Of course there’s “more to come”. Austerity shrinks the economy and wages, and hence creates the “need” for more austerity. It’s a vicious cycle, and we’re currently in a city-driven bubble….which is going to burst sooner rather than later.

  9. Thayaric

    What is the exact definition used to say a job is a full-time job? The job centre claims 16 hours a week is a full-time job for instance.

  10. Cole

    Actually, it was turning in 2010 before the Tories messed it up…

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