Wednesday 11 June 2014

A jobs recovery like never before

The Office for National Statistics (ONS) has released the latest set of UK labour market data, mostly covering the three months February to April 2014.

Britain’s jobs market is booming everywhere apart from in most people’s pay packets. The number of people in work increased by 345,000 (1.1%) to 30.54 million in the latest quarter on the household Labour Force Survey measure, with full-time employees accounting for almost two-thirds of the increase, altering the recent trend which has seen self-employment as the main driver of rising employment. Employment increased in every nation and region of the UK except Wales, which registered a fall of 17,000. The ONS’s alternative quarterly Workforce Jobs measure – based mainly on a survey of employers and covering the period January to March – shows a similar pattern, with the total number of jobs increasing by 380,000 (1.2%) to just over 33 million in the quarter.

Adjusting for changes to statistical classification, private sector employment increased by 355,000 (1.4%) in the quarter, dwarfing a relatively modest fall of 11,000 (-0.2%) in public sector employment. The latter fall suggests a slower pace of public sector employment downsizing compared to recent years, in part accounted for by a quarterly rise of 10,000 (0.2%) in NHS employment. Within the private sector there was a notable quarterly increase in employment of 43,000 (4.7%) in ‘arts, entertainment and recreation’.     

Total unemployment on the LFS measure is also down sharply (by 161,000 to a rate of 6.6%), while long-term unemployment has fallen below 800,000 and youth unemployment (down 59,000 to 853,000) is now clearly on a sharp downward path.  Total unemployment in the quarter fell in every region and nation of the UK except the North East which registered an increase of 6,000. The count of people unemployed on Jobseeker’s Allowance meanwhile fell by 27,000 in May. Underemployment as measured by the number of part-timers unable to find a full-time job has fallen by 39,000 though remains high at 1.4 million.

Yet despite all this very good news the rate of growth of average earnings has slowed, and not just because of the statistical effect arising from the unusual pattern of last year’s spring bonus payments. Although growth in total pay has fallen from 1.7% to 0.7% between April and May, growth in regular pay excluding bonuses has fallen too, down from 1.3% to 0.9%, which means the underlying squeeze in average real earnings has resumed (the comparable CPI rate of price inflation is 1.8%). This is therefore a jobs recovery like never before, loads more work but no greater reward, an economy that looks much healthier but feels little better in the workplace.

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