Private sector jobs recovery on track

Allister Heath
WE are not suffering from a jobless recovery. That is merely a myth, as yesterday’s jobs figures proved yet again. Employment jumped 390,000 year-on-year in the December to February period, the biggest gain since early 2008. Remarkably, this 1.4 per cent rise in jobs was better than the 2000-07 annual average of 0.9 per cent, as calculated by Michael Saunders, Citigroup’s European economist. It gets even better. At the start of the recovery, the bulk of the extra jobs were part-time or freelance – but that is no longer true. The number of full-time, employee positions surged 198,000 quarter-on-quarter, the second largest gain of the past 20 years. Redundancies also fell 19 per cent quarter-on-quarter to stand 59 per cent below peak and 18 per cent below the 2000-07 average.

Public sector employment fell by 123,000 year-on-year in December – but that was easily compensated for by the 428,000 jobs created by the private sector. Private firms created 3.5 jobs for each one lost in the public sector. There is little evidence in the jobs data that the economy is suffering a soft patch – especially given that these figures include the December statistics, which were supposedly disastrous. Total hours worked per week rose 0.6 per cent in the most recent period, compared with the three months to November 2010. Even if productivity per hour only grew a bit, that looks like a strong rebound to me.

But it isn’t all good. Unemployment is not dropping fast enough: it remains at 2.48m, down 17,000 from the three months to November 2010 and down 5,000 from a year earlier (the real level of joblessness is probably twice as high once recipients of other out-of-work benefits are included). Large numbers of people are joining the labour force every year, including youngsters, pensioners and migrants. Britain needs to be creating even more jobs to ensure sizeable drops in unemployment.

The number of jobs filled by UK born workers rose just 39,000 in December on a year earlier; those filled by non-UK born workers jumped 173,000. It seems that the British-born don’t have the right skills and attitudes to compete. Even more worryingly, the young are being squeezed out. Of the 390,000 extra jobs in the year to February, 221,000 went to people aged 50 or above. Just 8,000 went to the under 25s. But the much-reported claim that 20.4 per cent of 16-24 year olds are out of work is misleading. That assumes that there are 963,000 unemployed 16-24 year olds – but that includes students in full time education who can’t manage to find evening or weekend work. Stripping these out, there were 666,000 unemployed 16-24 year olds, down 15,000 from the previous three months.

It’s still a disastrous situation for young people, however, especially for those with no qualifications or skills. Too many suffer from appalling numeracy and literacy, weak presentational skills and an inability to fit into the world of work. Combined with the fact that the labour market is now more regulated, and that it is harder to fire staff, many employers have decided that older, more experienced workers pose less of a risk. The only sustainable answer is to sort out the education system, and to change the UK’s culture, which will take years – but speedy action on reducing the costs and risks of employing young people would also help. For the sake of those youngsters whose lives are being blighted by unemployment, it is time to tear up the red tape.
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