Home—Blog—What's good about the employment data?
Jan 20, 2010, 04:10
Posted byMerryn Somerset Webb
Comments (22)
When the unemployment numbers for the UK came out this morning they were welcomed as good news by almost everyone.
And in a way they were – the headline number had it that total unemployment for the three months to November stood at 2.46m. That's 7,000 down on the previous number, making the rate of unemployment a mere 7.8%.
But look a little deeper and the headline number covers up some truly hideous figures. The number of full-time jobs fell by 113,000, while the number of part-time jobs rose by 99,000. There are now 7.71m people working part time. More than a million of those say they are only doing so because they can't get full-time jobs. That's the highest figure since 1992, and while we can't class this one million as unemployed, they are certainly under-employed.
More bad news comes in the fact that the workforce is getting paid less in real terms: average weekly pay rose a mere 0.7%. Even worse than this number is the percentage of working-age people who are not employed, but not looking for work either: 21.1%. So more than one in five of the working age population is economically inactive. That's 8.05m people. Sure, some will be retired hedge fund managers and the like but not all of them: a good many more will have fallen out of the official unemployment statistics simply because they have stopped actively looking for work (presumably because there isn't any).
Overall 14,000 fewer people had jobs than in the previous period. I can see why the fact that things aren't even worse is nice. But on the other hand, it's hard to see how the fact that fewer people have jobs than they did, and that those who do have jobs are getting paid less, can be spun as good news. That's particularly the case given that UK unemployment is even now still being cushioned by the public sector: between the third quarter of 2008 and the third quarter of 2009 – the heart of the recession so far – public sector employment rose by more than 90,000.
But this can't go on. Public sector cuts are coming, and when they get here, jobs will go. So what will the unemployment numbers look like this time next year?
Unless we really do see a miracle recovery in the private sector (and the signs of one are pretty limited so far) the answer is not good at all. The government might not want to recognise this but the UK's workers clearly do. If they didn't, they wouldn't keep accepting the low pay and shorter hours that make them cheaper and cheaper, allow their employers to keep them on and keep the official figures looking less bad than they really are.
Published in Blog More articles by Merryn Somerset Webb
By Matthew Partridge, Feb 10, 2012
By Tim Price, Feb 10, 2012
By Matthew Lynn, Feb 10, 2012
Leave a comment
(20 January 2010, 04:50PM) Complain about this comment
Does this mean that house prices are going to go up?I am going to start applying for public sector jobs - no point running your own business, no point working in a pensionless private sector job.Join the public sector gravy train, have nice long holidays, have a nice pension, nothing stressful.I bet I am not alone in thinking that these days.
(20 January 2010, 07:39PM) Complain about this comment
To BobSadly you might be 12 years too late - the gravy started flowing in 1997 and the boat is now rapidly drying up
(20 January 2010, 08:42PM) Complain about this comment
What happens to those who are unemployed and are pushed into claiming Jobseekers Allowance? Apart from the very low level of benefit paid, I understand this form of benefit expires after just six months and that the claimants who have been unable to find any work in that time are just scratched from the list and are regarded as no longer seeking employment. I would think there are one or two million hidden unemployed if this is true.
(21 January 2010, 11:00AM) Complain about this comment
There are likely to be a lot of people out of work but not claiming benefits because they currently have savings over the threashold of £8,000. They will leave the NEETS and join the claimants as their savings are run down over the coming months.
(21 January 2010, 11:30AM) Complain about this comment
Mark Parker, above, has it right.I was made redundant last summer and still remain out of work. I'm not registered on anyone's 'unemployment figures' because I haven't yet registered for benefits due to savings. However, they are now virtually depleted so I will be (hopefully) signing on shortly.Not only do I know I'm not alone in this, I know an awful lot of people at my (excuse the phrase, but you know what I mean) social level in a similar situation.The real tell-tale will be the analysis of the Income-tax take. I bet that hides a horror story that the Government will be at enormous pains to cover up.
(21 January 2010, 12:07PM) Complain about this comment
I guess I must be thick!How does fewer people employed and those that are employed earning less add up to inflation, as so many at moneyweek believe.Surely this as Danny Blanchflower is saying means we are heading for a deflationary chill (if not permafrost)
(21 January 2010, 12:26PM) Complain about this comment
Yes Parry, the gravy train is coming to the end of its journey - will it turn into a gravy boat or will it just sink?Mark, I am one of those with savings - been ill, used to have my own business, have savings so do not show up as unemployed. I suspect there are tens if not hundreds of thousands in a similar boat.
(21 January 2010, 01:48PM) Complain about this comment
I sympathise with Bob. Self employed I have paid into a pension fund all my life. I am now over 65 though am still paying in to it "to be on the safe side" when I eventually draw it down. What a joke. the capital sum has been reduced by one third the last time I looked and yet our Government does not have the guts to freeze civil servants' pensions for a year. Their pensions are too generous too. Especially those serving for a comparitively short time.
(21 January 2010, 02:17PM) Complain about this comment
Another fact hidden away in yesterday's announcement was that the 1.1% rise in average earnings was attributable to a 0.1% fall in the private sector but a 3.8% rise in the public sector. That's not a typo, it really is a 3.8% rise in the public sector average earnings.This rise in public sector employment and earnings, while the private sector equivalents that fund it contract, is clearly unsustainable. Sadly, the longer is lasts as a head-in-the-sand, pre-election bribe, the harder the correction is going to be for everybody. Hard times ahead.
(21 January 2010, 02:29PM) Complain about this comment
Well done Merryn. Another insightful analysis. Unfortunately, these figures are a sign of things to come. The real pain will come when public sector expenditure/jobs are slashed to satisfy the markets. This will cause a vicious feedback loop into a signficant part of the private sector which now depends on govt. contracts for their profitability, such as IT services companies.Longer-term, we are heading for a polarized workforce with a mass of under-/unemployed workers and a tiny elite at the top. Why? Because all the bubbles in the West have burst and there are no new ones to replace them.
(21 January 2010, 03:13PM) Complain about this comment
Yes it's strange how a few extra jobs on the run-up to Xmas is being spun into 'recession over!'But as we all know, spin and propaganda is what it is - geared towards getting us out there and hammering those credit cards again in the safe and sure knowledge everything's going to be fine.What Ross S. says (2.29pm) is I believe very true - in the UK we will inherit a permanent underclass, a la USA, of people working part-time and/or short-term contract and on minimum wage, permanently reliant on credit to keep their heads above water. Polarisation between rich and poor the like of which we haven't seen for a century.The fact this will be allied with high accommodation costs and ever-rising utility bills (sold the farm to foreigners for whom we are just a source of profit) presents somewhat of a problem for our country going ahead.The social effects of all this will I believe be profound.
(21 January 2010, 03:24PM) Complain about this comment
As Ross S. says, a significant part of the private sector depends on public-sector contracts.Many public services are contracted-out to the private sector; whether in construction, IT, health, education, street-cleaning, etc. These workers are effectively employed by the state even though they aren't shown as such in the official figures.
(21 January 2010, 04:06PM) Complain about this comment
Two of my friends became unemployed last year. One in the construction industry, the other in IT. Their jobseekers allowances ceased after six months as their spouses earnings were taken into account at that stage and regarded as sufficient for their needs. Statistically they are not regarded as 'unemployed' now, but they still haven't got a job. The misery is yet to unfold.
(21 January 2010, 05:27PM) Complain about this comment
I find this heartbreaking.I knew this would happen-the figures are subject to such gross manipulation that they are worthless.I state now that I blame every worthless politician over the last forty years for allowing this country to become almost de-industrialised-taking the easy route of developing a candy floss economy of debt,property equity,and transient service jobs.I say this will all end in disaster-perhaps not this time but next recession.
(21 January 2010, 08:30PM) Complain about this comment
Why don't the media (BBC in particular) provide full analysis instead of reporting the glib drivel that the government spews out?
(21 January 2010, 08:45PM) Complain about this comment
New labour allowed millions of migrants to enter the UK to STOP working class wages increasing.Once you have you JSA, you housing benefit your free council tax and NHS fees its just not worth the effort to take a job for £5ph.
(23 January 2010, 06:29AM) Complain about this comment
The best place for freelance projects is freelancing sites. Freelancing sites are the best option for part time home based business and freelance jobs. There are many types of work available at freelancing siteswww.onlineuniversalwork.com
(23 January 2010, 10:48AM) Complain about this comment
You all sound very clever, I`m based in spennymoor in county durham. I`m looking to buying a house, I have a 25% deposit for say a 70k property. I`m starting to think I should wait because inflatin will push interest rates up and that will bring prices down. Is this right? And I sure could do with some advise! my email SUBBY565153783@aol.com
(23 January 2010, 04:07PM) Complain about this comment
When your JSA has run out, you should continue to sign on in order to receive your credit (unless you know your earnings for the year are sufficient).
(25 January 2010, 08:48AM) Complain about this comment
It is not at all surprising that 8 million people of working age "economically inactive", when you consider the incentives and disincentives created by the tax and benefit system.Generally, speaking, you should be taxing undesirable activities, or things which do not pay their full cost because of externalities (pollutants, banks which risk a crash etc).But we tax earning a living the most heavily of almost any activity (income tax is now over 60% at the top marginal rates); we tax employers for employing people; and we give people money for free if they do nothing (benefits).So we have a permanent undersupply of jobs; and a permanent oversupply of "economically inactive" people. Well, blow me down!
(31 January 2010, 02:19PM) Complain about this comment
Hi Lee , (I tried sending this to the e-mail you posted but it bounced back)This is the 'million dollar' question that I am struggling with. I too am watching, waiting and wondering - though everyday I have more and more faith in my decision to hold off last year. I notice that what is reported in the press is not reliable, house prices have been falling where I live in Cornwall through December and January but it was only reported in the local news this week. My sister is doing the same thing in Devon though the effect is less marked. Sickeningly in the local news report there was an estate agent and a rep from RICS wheeled in to talk the market up again. I use 'propertybee' and follow 'www.propertysnake.com' - plus the other forums that you can contact through these utilities/websites. 'Housepricecrash.com' has run out of steam and the contributors far less informed than they used to be - 'globalhousepricecrash' is better.
(02 February 2010, 08:07AM) Complain about this comment
• There's a movement to radically change California government, by getting rid of career politicians and chopping their salaries in half. A group known as Citizens for California Reform wants to make the California legislature a part time time job, just like it was until 1966.
Name This will be the name displayed with your comment.
Email This helps us verify comments are genuine. It will not be displayed anywhere on the site and is stored confidentially.
Comment Please keep your comment within 1,000 characters and relevant to the main topic. We encourage healthy debate, but we don't allow insults or bad language. Anything off topic or unpleasant, we'll remove. Enjoy the conversation! Thank you.
To prevent spam-related comments please enter the characters shown in the 'Captcha' box to the left.
Enter the text from the box above
Remember my details
By leaving a comment you accept our terms and conditions.
Our free daily email, Money Morning, is an informative and enjoyable analysis of what's going on in the markets. Written by our Editor, John Stepek, and guest contributors.Sign up FREE to Money Morning here.
10 Feb 12
09 Feb 12
Become a smarter investor in just 3 minutes a day.
MoneyWeek is not responsible for the content of external internet sites.