Two pieces of good economic news today, as the BBC reports:
UK unemployment falls to five-year low of 2.2m
The number of people out of work in the UK has fallen by 77,000 to a five-year low of 2.24m in the three months to February, official figures indicate. The unemployment rate now stands at 6.9% of the adult working population, the Office for National Statistics (ONS) said.
After six years, wages finally overtake inflation
After nearly six years of falling real wages, weekly earnings have finally edged above inflation. Weekly wages, including bonuses, rose by 1.7% in the year to February, up from 1.4% in January, according to the Office for National Statistics (ONS). Earlier this week, inflation, as measured by the Consumer Prices Index (CPI), fell to 1.6%. It is the first time that earnings have been higher than inflation for six years, apart from two months in 2010.
Here’s what the Lib Dem Chief Secretary to the Treasury Danny Alexander had to say:
“These figures are some of the strongest evidence yet that we are embedding the recovery. We have record numbers in work and unemployment falling at the fastest rate in over a decade.
“With earnings now rising in line with prices and employment rising, these figures reinforce the fact that the only way to higher living standards is to take the difficult decisions needed to deliver our long term economic plan.
“There is still a great deal more to do, but today’s announcement is solid progress on building the stronger economy in a fairer society that Liberal Democrats entered coalition to deliver.”
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26 Comments
The trouble is that virtually nobody out there actually credits the Lib Dems for any economic good news. Whatever we are saying about this recovery is not registering with the voters. Instead the Tories are getting all the benefit. Unless our communications people can tackle this in some way, we will end up with the disaster of a Tory majority next year.
I don’t want to sound negative but with the levels of debt we have wage growth at 1.7% and inflation at 1.6% isn’t great. Far better if both figures were more like 3-4%.
And what exactly IS the long term economic plan? Initially it was radical fiscal retrenchment; now it appears to be less severe fiscal tightening mixed with a housing stimulus. Is this really a long term economic plan? People can run down their savings in the short run (and why not there’s no interest on them!) and you can reinflate a property bubble for a short while. We can also have a fire sale of our assets to make up for the shocking trade deficit. However in the not too distant future well will find our debts are unmanageable and we have no assets left.
More tosh from Danny Alexander. Firstly, the majority of peoples income have not grown by more than inflation – and surprisingly enough, we know it. Secondly, there is real concern that the jobs are quanity not quality and thirdly there is no evidence that the recovery is embeded, or that the deficit reduction will be ongoing. On the contary, the economy has not shifted from an over dependance on banks and rising house prices. The Governments mad cap ‘help to buy’ scheme is fueling another bout of insane price rises, inequality continues to grow and there is no coherent plan for what the economy should look like in 10 years time – apart from much the same as it does now.
2.24 million people unemployed is still much too high. And too many of them are young people..
One of the odd things about VI Polls over the last 4 years is that they have moved entirely in line with the average historical shifts, in other words the evidence suggests that , so far The Economic Recovery has had no affect on Polling at all. That is not so surprising if you look at Polling on The Economy, a big chunk of Voters refuse to admit there is a Recovery at all & most of the rest claim its not reached them. Public views have shifted substantially but havent reached the point where they affect their ideas on Politics yet.
Any Political benefit from Economic Recovery has yet to arrive.
Youth unemployment still high, it is still to be correctly how many jobs are now on zero hours and part – time or temporary, how many of these classed as employed are ‘benefit sanctioned’ for minor infractions to their ‘agreement’? When employees begin to feel stability in their jobs and that means the public sector as well, then we may have something to crow about. As for wage increases , to catch up to pre 2008 standards it will take a few good years or stable growth, and that isn’t based on a gloomy overcast that is a London fueled housing boom.
So after years of falling living standards, they are now merely stagnating (at a much lower level than in 2008).
Has it come to this? Championing the fact that living standards are no longer falling?
Note the 1.7% includes bonuses otherwise 1.4%, it is the lowest paid who are least likely to get a bonus.
I think anyone who bemoans living standards under the current government has failed to grasp that:
1) The government has no influence over private sector wage rises and very little influence over price inflation in the key areas of energy and food which have been led by world market movements. These are the factors that have hit living standards and would have been the same under any government that had been elected in 2010;
2) The declining trend for growth in median real disposable household income actually began way back in 1999. The rate of growth has been declining pretty steadily from that point (i.e. two years into Labour’s first term) and first went negative in 2005, reviving slightly before plunging during the recession.
What matters overall long term as far as living standards are concerned is labour productivity and current Coalition policies of trying to improve funding for business investment, spending money on expanding apprenticeships, and trying to improve educational standards once more after they were massively watered down are all spot in terms of tackling the UK’s underlying problems. The problem is that these things take time, because they are to do with the underlying structure of the economy.
However, the fact that living standards have at long last broken a trend begun long before this government came to power and started to recover, however slowly, because of an improving jobs market and lower petrol and food prices, should be a reason for at least a small degree of satisfaction. The Coalition didn’t start or cause the trend to lower living standards, but it was at least in power when it came to an end.
The continuing trend towards falling unemployment is good news. At 6.9%, the unemployment rate has fallen below the threshold at which the Bank of England said last August it would consider raising interest rates under its policy of forward guidance.
However, the Bank of England has repeatedly stressed that an unemployment rate below 7% is not a trigger for an automatic interest rate hike, and modified its forward guidance policy in February to focus on the amount of slack it considers to be in the economy, based on a broad range of indicators.
With 1.421 million people working part-time because they cannot find a full-time job, a youth unemployment rate of 19.1% and more than 800,000 people unemployed for more than a year – there is still a long way to go to take up the slack in the labour market.
To consolidate the recovery, it is important that we see measures to increase productivity and firmer action on youth and long-term unemployment. A continued focus on the restoration of normal levels of access to finance for SME’s , the introduction of job guarantees, improved incentives to train and recruit apprentices, and maintenance of support for export and investment are the basic tools needed to achieve this.
Longer term to drive wages up to and beyond the level of a living wage requires the creation of a UK wide economic environment in which technically skilled higher wage work is the main form of employment in the UK – as it was when we had a significant manufacturing base in this country.
That policy can only realistically be achieved by way of an industrial policy based on devolving power and responsibilities to the UK’s main towns and cities and delivered through a working partnership of local authorities, local enterprise partnerships and our principal universities and university technical colleges.
The Heseltine report is the blueprint for this policy.Vince Cable said of it:
“We have grasped the challenge that Lord Heseltine’s report posed to Government and accepted the vast majority of his recommendations. The plans will boost the UK’s competitiveness nationally and drive local growth through the local Growth Deals that we will be negotiating with every Local Enterprise Partnership.”
“In line with Lord Heseltine’s report, today we have also announced a package of wider support that is a big vote of confidence for our industrial strategy, particularly the aerospace, automotive and agri- technology sectors. This support not only gives businesses certainty, but shows the Government is determined to back those sectors where Britain can deliver and compete on a global scale in partnership with industry.”
Nick Clegg said:
“Over the last few decades, central government has systematically deprived local government of control and power. Only half of the money spent locally is raised locally, robbing our cities and regions of both the power and incentives to drive local growth.”
“That is why we’ve already allocated £2.6 billion through the Regional Growth Fund, forecast to deliver and safeguard 500,000 jobs and £13 billion of private investment. And through City Deals we are giving cities a core package of powers and freedoms.”
“Lord Heseltine’s review is the icing on the cake. His local vision is the best way to foster local growth and stimulate the economy. A single local growth fund that Local Enterprise Partnerships apply to, joined up working between local authorities so they make strategic decisions on projects that boost growth such as infrastructure spanning their areas, and specialist support from civil servants. It’s a big change from the hand-out attitude of the past that stifled innovation and turned the regions into powerless centres that relied on Whitehall for jobs and spending.”
So what. I am a coalition supporter and support their economic policy and would certainly not vote Labour ever again.
However we are doomed at the moment and to think otherwise is I submit totally naive. All the credit is going to the Cons and that was inevitable and will not change.
We must have a change of strategy, direction and leadership pronto.
These are fantastic figures, the party should get some graphics developed prompto. However, I don’t like the way house prices are not included in “prices”, along with other asset prices, which determine things such as pension yields.
RC –
Where in the polls is there any suggestion that we will end up with a Tory majority next year ?
All the indications, poll predictions etc show that Labour are likely to get a small majority.
& the unemployment figures aren’t as good as they’ve been made to appear are they ?
Many people who’ve been sanctioned for benefits, often for the most unfair reasons, don’t continue to sign on for JSA & are therefore not included in the unemployment figures.
People on Work Programme , getting training or Universal Credit are also magicked out of the figures.
To be honest, changing leader, as suggested by Theakes above, will not help.
The problem is that the party is in a death embrace now, embroiled in a coalition with one of the most incompetent, compassionless, and sleazy parties we’ve had. The Lib Dems are tainted and no amount of £110,000 earning spads will be able to spin the party out of it.
A lot of the comments on here demonstrate my point about Voters being unwilling to accept that there is a recovery, or that it will effect them. We all invest emotional capital in our view of the world & change hurts.
It is a good thing that unemployment has fallen to 6.9% and this means 2.24 million people are out of work looking for employment. However under the Labour government 1974-79 unemployment rose to above 1 million people and peaked at 6.2% with a huge outcry. The lowest annual average was in 1974 at 2.6%. Unemployment in this country has never been so low again. The lowest annual average in the 1980s and the early 1990s was for 1989 at 6.3%.
If we want to return to the unemployment levels we had before the 1970’s we need to change our economic policy and invest in the economy to create jobs in huge numbers.
More people in employment is a bold claim as it all depends on what is meant by employment and whether it’s the living wage kind, minimum wage or not paid at all kind. Strip out the funny money calculations from the wage rise and it’s still well below where it should be. Better come up with a better story that Osbo re-treads Danny
Fine but what about the poor and the disabled? Even with a growing economy there are no plans to reduce cuts to help these disadvantaged groups of people who find themselves in dire circumstances. We see poverty and hunger increasing in this country whilst Alexander crows about building ‘a fairer society’.
Ray Cobbett yes absolutely!
Sandy, any coalition will surely involve one or the other of the most incompetent, compassionless and sleazy parties. I struggle to see how being tainted by association with one of them can be worse than being one of them. And yet they both lead us in the polls.
Joe Otten”Sandy, any coalition will surely involve one or the other of the most incompetent, compassionless and sleazy parties. I struggle to see how being tainted by association with one of them can be worse than being one of them. And yet they both lead us in the polls.”
And your last sentence points to the real tragedy in all this. In May 2010 there was such a heady feeling that one if the parties of government would be the principled Lib Dems, that now we would see ‘a different kind of politics’. If that had turned into reality, LubDems would be surging in the polls now and possibly giving Labour a run for their money. Even after the Tuition Fees debacle, I remember the rush if excitement when the Lib Dems forced the NHS ‘pause’ – “this”, I said to my husband, “is what the LibDems are for!!! Thank God for the LibDems! ”
It could all have been so different.
As Caracatus say this is utter tosh.
On the earnings side it is, as Peter Hayes says, it 1.7% only if bonuses are included; without them it’s only 1.4%. The World at One added the extra information that only 4% of the population gets these bonuses.
And it gets worse. CPI inflation may be only 1.6% but that excludes mortgage interest and other housing costs. RPI which includes them is running nearer 2.7% – nearly double the rate of wage increases.
http://www.economicshelp.org/blog/1338/inflation/difference-between-rpi-rpix-and-cpi/
Indices are necessarily broad averages which don’t always correlate well to reality rather like the proverbial 2.4 children. But even so this really takes the biscuit.
So, if most people don’t feel the ‘Recovery’ has reached them yet they are right and it’s no surprise that voting intentions aren’t shifting. This is a recovery only for those that don’t really need it.
It’s difficult to see how this sort of nonsense does anything good for the Lib Dem brand.
The claim that wages have caught up with price inflation is exactly like saying that because my racehorse is now running as fast as the leading horse, it is on course to win. The trouble is that it has actually been running slower than the leading horse for the last four years, so it is actually twenty lengths back down the field.
To win the race, you don’t just have to match the speed of the leader. You have to make up all the ground that you lost. Wages have not done that, so Labour are still right – people are poorer.
David Allen
If you want a horse race analogy I suggest this.
The horse entitled Liberal Democrat economic policy has been tied to another horse in the equine equivalent of a runner in a three-legged race. So both horses go slowly.
The other horse to which it is tied is going in the wrong direction, therefore the Liberal Democrat finish line gets further away. So much so that jockeys like Jeremy Browne forget where the finish line is and urge us to go faster and further in the wrong direction.
Race Plan nicely summed up John!
Instead of this awful news gush from Danny why doesn’t he pop over to HMRC and squash their plans to flog off taxpayer data to the highest bidder?