REMEMBER all those people predicting that unemployment would rocket because of austerity? How the private sector would never be able to compensate for the cuts in the public sector’s workforce? Fortunately, it turns out that the doom-mongers got it wrong. The economy is hardly in a good state, of course, and tragically far too many people remain jobless. Large parts of the country are in deep financial trouble. But overall the employment situation has been pretty good all considering, especially in the broader London area.
The total number of people in work in the UK is at a record high. There are lots of caveats, of course, but ultimately the resurgence in UK jobs since the crisis has been the great good news exception in an otherwise gloomy and depressing economic narrative.
There were 29.59m people aged 16 and over in employment in June-August, up 212,000 on March to May 2012 and up 510,000 on a year earlier. So what are the caveats? Total hours worked per week were 936.5m for June to August 2012, down 2.6m from March to May 2012 but up 13.6m on a year earlier. The figures were clearly disrupted by the extra Bank Holiday and by the Olympics. However, they do suggest that the total number of hours worked remains below the 949.3m seen in January-March 2008. On that measure, the total amount of work in the UK economy is still 1.4 per cent lower than at the height of the bubble, even though the population has increased during that time.
Around 17.8 per cent of part-time workers would like but were unable to secure a full-time job, the CEBR points out. Over the past five years, full time employment has fallen by 355,000 and part-time employment has increased by 724,000. This is the biggest downside to the figures.
Another useful indicator is the employment rate for those aged from 16 to 64, which has increased to 71.3 per cent in the most recent period. This is the highest figure since February to April 2009; but it remains below the pre-recession peak of 73 per cent in March-May 2008. There is also no doubt that a minority of the jobs created over the summer were caused by the Olympics and were temporary.
Another interesting shift in the figures is that UK-born workers and UK citizens are finding large numbers of jobs again; for a long time, it was only those born overseas who were succeeding in the labour market. The number of UK nationals in employment over the past year in April-June was up 246,000; the number of non-UK nationals was up just 15,000. The number of UK born people in employment rose 190,000; the number of non-UK born people in employment rose 67,000.
There are also promising signs that welfare reform is beginning to work, despite all the teething problems, and that people are being reclassified to the correct out of work benefit or finding work. There has been a substantial reduction (of around five per cent in one quarter) in the number of those who are economically inactive through long-term sickness.
So why is the jobs market doing much better than most people predicted? When the price of a commodity drops, people want more of it. Total pay (including bonuses) rose 1.7 per cent on a year earlier, while regular pay (excluding bonuses) rose two per cent. In both cases, that is still below the rate of consumer price inflation (2.2 per cent) and retail price index inflation (2.6 per cent), which means that real wages are still falling. Workers are understandably miserable because their pay packets are allowing them to buy less – but that is also the reason why so many bosses have become happier to hire.
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