Good news on the jobs front, but pay is definitely not recovering

We’re going down an uncertain path, with serious threats for working people.

We’re going down an uncertain path, with serious threats for working people

What should we make of today’s employment figures? With unemployment finally dropping below two million, but pay only 0.7 per cent higher than it was a year ago?

One of the difficulties for progressive economic commentators at present is how to get the balance right. At a time when the government and its cheerleaders insist that each month’s labour market statistics are a sign we’ve entered a new golden age there’s a natural tendency to go to the other extreme, and insist that there’s nothing positive going on.

But that’s the approach that will lead us to try to re-fight old battles, not recognise the nature of the new one. So the key point for us to learn is that Cameron’s jobs misery is not the same as Thatcher’s or Major’s. In the 1980s and 90s, unemployment rose over three million and stayed there for month after month. That simply isn’t the case now; in today’s statistics:

  • The employment level rose to 30.76 million, the highest ever.
  • The employment rate (a much better indicator) reached 73.0 per cent, the highest since 2005.
  • Unemployment fell to 1.97 million; compared with a year ago, the number of unemployed men is down 22.9 per cent and the number of unemployed women down 19.5 per cent.
  • Youth unemployment, which briefly topped one million at the end of 2012, is down to 733,000.
  • Long-term unemployment, whether defined as over 6 months, 12 months or 24 months, came down and has been coming down for several months.

My favourite indicator, the ratio of unemployed people to job vacancies, is headed for pre-recession levels:

Vacancies chart

To recognise this isn’t to be taken in by ‘Tory lies’ and it isn’t defeatism. It’s simply to say that rising employment and falling unemployment are better than the alternative; and if we don’t recognise this we will sound out of touch.

A poll released today by recruitment consultancy Glassdoor showed a smaller proportion of workers worried about redundancies and a small increase in the proportion who thought they’d be likely to get a similar job within six months if they lost their current one (and a much bigger improvement among unemployed people).

This is just a straw in the wind (but the poll was carried out by Harris, a reputable organisation) but my point stands: progressives who refuse to acknowledge that there’s anything positive about the labour market figures will soon seem out of touch to anyone who doesn’t already agree with them.

But it’s equally important to recognise that what’s going isn’t simply a recovery, and that we’re going down an uncertain path, with serious threats for working people.

The most obvious point to make is that pay is definitely not recovering. Total earnings (that is, including bonuses) were just 0.7 per cent higher in the latest figures than a year ago and regular earnings 0.9 per cent higher. If we look at the actual cash increase, regular earnings rose from £451 a week in July to £452 in August – and the only sector with a significant cash increase was finance and business services, which rose from £538 to £543.

Not only is this the longest wage squeeze since the 1860s, the Glassdoor survey I quoted above shows that, while workers may be a bit more optimistic about their job security they are still depressed about their pay prospects: the proportion expecting a pay increase in the next 12 months fell from 37 to 35 per cent, while the proportion expecting no increase rose from 43 to 44 per cent.

There may be more jobs, but they aren’t well-paid jobs:

Average earnings

That’s why, at the TUC, we’re expecting a huge turnout on Saturday for our Britain Needs A Payrise demo.

The second point is that we still have some way to go before unemployment is down to pre-recession levels: in April 2008, there were 1,625,000 unemployed people and the unemployment rate was 5.2 per cent. In today’s figures, the unemployment level was 1,972,000 – a third of a million higher – and the unemployment rate was 6.0 per cent.

There are 187,000 more unemployed women than there were on the eve of the recession, 54,000 more unemployed young people and long-term is much higher on all definitions – 53 per cent more unemployed over 6 months, 75 per cent more unemployed over 12 months and 103 per cent (i.e. more than doubled) over 24 months.

The third point is that ‘atypical’ employment, especially self-employment, accounts for a disproportionate share of the improvement in employment. (I’m not denying that ‘atypical’ jobs can be good for people who want them, but for many workers the typical low pay and poor job security mean they’re very definitely second-best).

There are now a million more people in employment than there were on the eve of the recession – but two thirds of these are self-employed and three quarters are working part-time: the number of employees working full-time is still 67,000 lower than it was in April 2008. This has eased off a little recently – the number of self-employed workers has fallen for the past two months – but we have a long way to go before we can say that we have a secure jobs recovery.

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