Unemployment: Headline figures camouflage underlying picture of weakness

A recovery driven by part-time work and accompanied by falling living standards won’t feel like a recovery to most people, writes Duncan Weldon.

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As with last month’s release, today’s labour market statistics present good headline numbers that camouflage an underlying picture of weakness.

Unemployment, on the broad International Labour Organization measure, fell by 45,000 on the quarter to 8.2%. This good news was repeated in the narrower (and timelier) claimant count series, where unemployment fell by 13,700 in April. Employment rose by 105,000 on the quarter and the employment rate increased to 70.5%.

Job-Centre-queue
However, the increase in employment, and the corresponding fall in unemployment, was entirely driven by part-time work:

• The number of people in full-time work fell by 13,000 whilst the number working part-time increased by 118,000 – over the past year the number of people in full-time work has fallen by 55,000 whilst the number in part-time work has increased by 150,000;

• The number of people working part-time who say they want but can’t find full-time work rose by 73,000 to a record high of 1,418,000 – the number of people working temporary contracts who want a permanent position rose by 14,000 to 616,000;

• More than two million people are now ‘under-employed’ alongside the 2.6 million out of work;

• In other words whilst the labour market is showing signs of stabilising and whilst unemployment is starting fall, the ‘recovery’ is being driven by part-time and often precarious work; and

• Whilst unemployment is falling, under-employment is rising.

 


See also:

Headline unemployment fall is good news, but underlying picture remains grim 18 Apr 2012

Latest labour market stats are encouraging, but we should remain cautious 14 Mar 2012

Employment figures mask the rise in under-employment 15 Feb 2012

“The PM is wrong: the labour market is very weak” 18 Jan 2012

Unemployment: Plan A isn’t working 14 Dec 2011


 

This underlying weakness is feeding through into extremely weak wage growth. Headline unemployment has been falling and employment rising for two months and normally one would expect a tightening labour market to lead to a faster pace of wage growth. In fact the opposite is happening – wage growth has been slowing since July last year.

As Chart 1 makes clear, the large fall in inflation since it peaked in the autumn has not relieved the pressure on real wages.

Chart 1:

Real-wages-2010-2012-May-2012
Real wage falls slowed towards the end of 2011 but have reaccelerated since January 2012. Continuing falls in real wages will put the recovery at risk.

Whilst the headline figures today are obviously to be welcomed it would be a mistake to hail a successful recovery in the labour market. As long as real wages are falling living standards will remain under pressure. A recovery driven by part-time work and accompanied by falling living standards won’t feel like a recovery to most people.

 


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17 Responses to “Unemployment: Headline figures camouflage underlying picture of weakness”

  1. FiveDee

    RT @leftfootfwd: Unemployment: Headline figures camoflague underlying picture of weakness http://t.co/Kl03ahwv

  2. Anonymous

    However, the increase in employment, and the corresponding fall in unemployment, was entirely driven by part-time work:

    ==============

    It’s redistributing work more fairly. What’s to complain about? You want the same for everything else, cash, food, housing, cars, drinking, … unless you are one of the chosen ones such as MPs or union leaders.

  3. Foxy52

    Frm earlier: Unemployment: Headline figures camouflage underlying picture of weakness, by @DuncanWeldon: http://t.co/d01AOgpg #jobs #economy

  4. Pam

    Note -Headline unemployment figures camouflage underlying picture of weakness, by @DuncanWeldon: http://t.co/OOZQ5XgU #jobs #economy”

  5. Kevin Richards

    It's not aull as it seems RT @leftfootfwd: Unemployment: Headline figures camouflage underlying picture of weakness http://t.co/H9QGRyCX

  6. Alex Braithwaite

    RT @leftfootfwd: Unemployment: Headline figures camouflage underlying picture of weakness http://t.co/SJW0O6aB

  7. Anonymous

    Typical Feral 1% lies. You know fullwell the problem of part-time jobs, but refuse to do anything about it since it aids your Campaign for Chinese Wages.

  8. BevR

    RT @leftfootfwd: Unemployment: Headline figures camouflage underlying picture of weakness http://t.co/tOjrk0XJ

  9. sean

    RT @leftfootfwd: Unemployment: Headline figures camouflage underlying picture of weakness http://t.co/tOjrk0XJ

  10. Foxy52

    RT @leftfootfwd: Unemployment: Headline figures camouflage underlying picture of weakness http://t.co/tOjrk0XJ

  11. Jane Canning

    RT @leftfootfwd: Unemployment: Headline figures camouflage underlying picture of weakness http://t.co/TZQxQfUE

  12. BevR

    RT @leftfootfwd: Unemployment: Headline figures camouflage underlying picture of weakness http://t.co/tOjrk0XJ

  13. Steve Walker

    RT @leftfootfwd: Unemployment: Headline figures camouflage underlying picture of weakness http://t.co/SJW0O6aB

  14. cameronsfollys

    #Unemployment: Headline figures camouflage underlying picture of weakness http://t.co/kj4itvL5

  15. Hamdan Communication

    RT @leftfootfwd: Unemployment: Headline figures camouflage underlying picture of weakness http://t.co/H7Q4290B

  16. Look Left – The Tory Olympic legacy, Osbornomics under siege and IDS | Left Foot Forward

    […] on the economy more generally, read Duncan Weldon on how the headline unemployment figures camouflage the underlying picture of weakness; Ed Cox on […]

  17. Labour market statistics: Unemployment is falling, yet so are real wages | Left Foot Forward

    […] previous months, we have reported that good overall figures have disguised an increase in underemployment and a decline in the number of full-time jobs and there was an increase in […]

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