Wednesday 14 August 2013

A jobs recovery to write home about?

There is some good news in the latest jobs figures, published earlier today by the Office for National Statistics – 69,000 more people in work in the quarter April-June, a small fall of 4,000 in unemployment, 29,200 fewer people claiming Jobseeker's Allowance in July, 19,000 more job vacancies and 17,000 fewer redundancies. All this suggests that things are moving in the right direction, albeit volatility in the quarterly data make the underlying trend difficult to assess while the likely rate of progress in the remainder of the year remains uncertain. Independent surveys of employers' hiring intentions, including those published by the Chartered Institute of Personnel and Development earlier this week, suggest the news will remain broadly positive. Yet despite this there are enough worrying signs about the underlying state of the UK jobs market to dent the enthusiasm of those tempted to swallow uncritically the more upbeat economic narratives that have surfaced in recent weeks.      

The latest quarterly rise in employment is almost matched by an increase in the size of the workforce, which means the unemployment rate is unchanged at 7.8%, suggesting that the Bank of England might be right to think the jobless rate will remain above 7% for some considerable time yet. Corresponding population growth also means that the employment rate has more or less flat-lined since last autumn. Meanwhile, in line with the general trend of late, the number of men unemployed has increased by 15,000. Youth unemployment has also increased by 15,000 (on its way back toward the 1 million mark once more), with the number of 16-24 year olds in work sharply down by 92,000. Long-term unemployment has increased by 7,000 (to over 900,000) with the number of people unemployed for more than two years approaching half a million (474,000). 

Moreover, while job security might have increased a little (the quarter saw a big drop of 70,000 in temporary employment, suggesting that permanent posts account for all the net new jobs created between April and June) underemployment has also increased and the squeeze on pay has continued. The number of part-time workers who want a full-time job jumped 25,000 to 1.4 million in the quarter. And although the headline rate of growth of average earnings has increased to above 2%, regular pay (adjusted for bonus payments) is only rising at 1.1%, well below the 2.8% CPI inflation rate.

The headline jobs figures may continue to be broadly positive but one only has to dig a little deeper into the statistics to see that millions of people are still being hit by a combination of lack of jobs and a ceaseless sharp fall in the real value of their pay. This doesn't look or feel like an economic recovery to write home about. 

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