Once again we’re reminded: this won’t feel like a recovery to most people

While the overall number of people in work is now higher than in 2008, the composition of the workforce is very different.

While the overall number of people in work is now higher than in 2008, the composition of the workforce is very different

Yesterday’s labour market statistics shows strong improvements in employment and further falls in unemployment. At 73 per cent the employment rate is back to its pre recession level.

The unemployment rate has also continued to fall and at 6.4 per cent is the lowest it’s been since late 2008.

While there is still some way to go before pre- recession rates (5.2 per cent) are reached, this progress is welcome.

The fall in youth unemployment is also positive. There are currently 767,000 16-24 years old unemployed, a fall of 102,000 over the quarter and 206,000 over the year. These are the largest quarterly and annual falls in youth unemployment since 1992 when comparable records began.

However youth unemployment was rising before the current downturn started, and youth unemployment levels still remain far too high. What’s more, around a third of 18-24 year olds are long term unemployed; a substantial youth unemployment challenge remains.

Youth unemploymentj

Over the last quarter much of the growth in employment has been in full-time positions, of the 167,000 increase 90 per cent is accounted for by full-time work. There has also been a rise in full time employee jobs of 155,000 in the last quarter and 440,000 over the last year.

However full-time employee levels have not exceeded pre- recession levels and proportion of working age people who are full-time employees has fallen from 64.4 per cent in 2008 to 62.3 per cent today. While the overall number of people in work is now higher than in 2008, the composition of the workforce is very different.

Jan-Mar 2008 April to June 2014 Change Percentage change
Employees 25,428 25,767 339 1%
Self employed 3,858 4,590 732 19%
Total working part-time 7,522 8194 672 9%
Employees full-time 18,991 19056 65 0%
Employees part-time 6,437 6710 273 4%
Self-employed full-time 2,930 3623 693 24%
Self-employed part-time 928 1327 399 43%
Involuntary Temporary Work 359 599 240 67%
Involuntary Part- Time 701 1334 633 90%

(data in 000’s)

This data show involuntary part-time work and temporary work still remain high, and as we have covered before the rise in self employment has been extraordinary, with levels increasing even when unemployment was still rising sharply. This strong growth continues, over the last year almost half of the employment rise was from self employment even though the self employment share of the market is only 15 per cent.

While self employment allows those who have always wanted to start their own business and to be their own boss to do so, the TUC’s concern is that some people have been forced in to self-employment as they have no alternative. Previous TUC analysis also shows that self-employed workers are often earning less, more likely to be underemployed and with less job security than employees.

Pay including bonuses was 0.2per cent lower than a year earlier however, as ONS point out this was mainly due to an unusually high growth rate for April 2013 as some employers who usually paid bonuses in March paid them in April last year. Pay excluding bonuses for employees was only  0.6 per cent higher than a year earlier, which confirms the squeeze on earnings continues.

Claims earlier in the year that pay had begun to catch up with inflation now appear premature. The Bank of England today has halved its forecast for average wage growth, saying it now expects average salaries to rise by only 1.25 per cent this year.

Average earningsj

Even using the Governments preferred measure of CPI inflation of 1.9 per cent (which excludes housing costs) as opposed to RPI of 2.6 per cent, real wages are still falling. This will not feel like a recovery for most working people.

Anjum Klair works in the TUC’s Economics and Social Affairs Department

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