Record jobs but we’re only just back to normal hours

During the course of the UK General Election campaign the Conservatives and Liberal Democrats have pointed to the number of jobs created since 2010, while Labour and many of the minority political parties instead emphasise the squeeze on real earnings. As a result, I’m often asked why a record employment rate has yet to trigger an obvious economic feel good factor. There are several ways of looking at this but something that is often overlooked is the average amount of work people are doing, which has only just returned to what was considered normal prior to the recession.

At the start of 2008, just before the recession struck, UK workers were on average working 32.2 hours per week. This was around the average for most of the 2000s and around an hour less than the average for the 1990s, the fall over the decade due to a shift toward jobs offering shorter hours. At the time of the last General Election in 2010 this figure had, in the wake of the recession, fallen to 31.6 hours – a loss equivalent to almost a week’s work over the course of a year, which is clearly enough to make the average worker feel worse off.

Since then average hours have risen again but (by the end of 2014) were only back to where they were just before the recession i.e. 32.2 hours per week. This is despite lots more jobs being created and a record employment rate, reflecting the fact that there has been a further shift toward jobs offering shorter hours. However, for most of the period during which average hours were returning to normal the amount people were on average earning for each hour they worked was also falling in real terms. The lack of a noticeable feel good factor is therefore understandable.

For the average worker to feel as well off as before the recession we will thus have to see either an increase in the length of the average working week (say taking it back to where it was in the 1990s) or higher productivity per hour worked in order to boost hourly earnings. Assuming that most people would prefer to work smarter rather than harder (i.e. enjoy an improvement in their overall economic and social well-being) this suggests that measures designed to raise productivity and pay per hour should be at the centre of the General Election debate. Sadly, despite lots of rhetoric about the situation of ‘hard working families’, such measures are a best only implicit in much of what we have heard from our politicians in the election campaign so far.