Latest employment figures: what’s really going on with the labour market?
Photo credit: markb
August 15, 2013 // By: Jacob Mohun Himmelweit
Latest job figures were released by the ONS yesterday, and on first glance it’s good news: between April and June another 69,000 people moved into work, bringing total employment up to 29.78m - the highest since records began in 1971. This period has also seen a fall in the number of unemployed people by 4,000, and those claiming Jobseekers Allowance by 29,200 between June and July 2013.
So is the economy now back on track? The government would certainly like us to think so, but a closer reading of the figures suggests such optimism is premature. Unemployment still stands at a staggering 2.51 million, and that the unemployment rate of the active population remains stuck at 7.8 per cent means the labour market has only just managed to keep up with new entrants. In other words, the fact that there are more people than ever in employment only reflects that there are more people than ever, and the labour market is effectively stationary. Not exactly evidence of recovery.
More worrying still are those figures relating to long-term and youth unemployment. The number of people unemployed for over two years rose by 10,000 in April to June compared to January to March, and an additional 15,000 young people are now without work, bringing total youth unemployment up to 973,000.
These numbers suggest that the labour market is failing those who would benefit most from employment. Periods of unemployment are particularly damaging for young people looking to enter the job market, and yet the chances of finding work once you have been unemployed for any significant length of time now appear ever more hopeless.
Even for those who have managed to secure jobs, pay packets continue to be eroded by the cost of living. Increases between April to June 2013 on a year previously are 2.1 per cent when bonuses are included and only 1.1 per cent for regular pay. Both these fall significantly below the CPI inflation rate of 2.9 per cent in June. The labour market is running to stand still, and at the expense of wages that continue to go backwards.
While the announcement that the Bank of England will allow some deviation from target inflation and put greater focus on bringing down unemployment is welcome news, both the measly unemployment target –only 7%, a fall of roughly 250,000 unemployed people - and the time in which the Bank expects the economy to hit this target – by Autumn 2016 - suggests that optimism for labour market growth is not shared on Threadneedle Street either.
Once you scratch the surface of current employment figures the outlook looks at lot less rosy than the Chancellor is likely to admit. We’ll be reporting on the newly published figures from the ONS each month, and look forward to writing something more positive in the future – although, on this evidence, we won’t be holding our breath.
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