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:


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

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