Yesterday’s monthly update from the office for national statistics shows unemployment down 97,000 in the last quarter of 2014 and by 486,000 on a year earlier.
The chart above shows the dramatic fall in unemployment over the last year, alongside drops in youth unemployment (which had been rising between 2002 and 2011) and long term unemployment.
I have written before on this and now the picture is even clearer.
How has this happened? A credible plan to bring down the deficit, that investors will have confidence in; investment in skills through 2 million apprenticeships, university technical colleges and city deals; increasing the personal allowance so that more jobs are worth doing for the pay that they can command…
Scratching around for bad news, the opposition message is that this is all low wages and zero hours. But the corner has been turned on pay, with pay up 1.7% in 2014 against inflation of 0.5%. And although there are no long time series for zero hours contracts, there are for self-employment and (self-declared) part time work:
Now it is possible that some zero hours workers are getting enough hours to report themselves as full-time, and still suffer the insecurity and unavailability of credit that goes with zero hours contracts. However, while there clearly are many zero hours contracts around, if this were in any way an explanation for the good employment figures, surely that would show up as greater numbers of part time jobs being created than full time. But while jobs are being created in all groups, full time employment is being created the most.
Contrary to Labour’s predictions of a million extra unemployed, we have 1.75 million more jobs, 1.33 million of which are full time.
Employment data is from the ONS A01 spreadsheet, Feburary release, uploaded here to generate graphs.
* Joe Otten was the candidate for Sheffield Heeley in June 2017 and Doncaster North in December 2019 and is a councillor in Sheffield.
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28 Comments
Before all the trolls start saying it all down to zero hours contracts I thought it would be helpful to put up what Full Fact say about them:
https://fullfact.org/article/zero_hour_contracts-38391
Do the unemployment figures include the 1.4 million on Workfare, the 1.4 million on zero hour contracts, the 1.4 million on jsa sanctions or even the 500 ,000 disabled on unpaid workfare?
Just wondering?
Zygmunt: yes. Although some of those sets of figures do overlap.
Hi Zygmunt. Do give a source for the 1.4 million on workfare etc. But can I ask did you believe figures from this source when they said unemployment was going up?
“did you believe figures from this source when they said unemployment was going up?”
Indeed. Believe the evidence when it accords with your assumptions, cast doubt when it doesn’t — a pretty universal trait.
There’s a lot wrong with the labour market, including all the things that Zygmunt mentions. But the underlying facts, that this recession has seen depressed wages rather than a massive increase in unemployment, and that unemployment is now falling, are very welcome, and probably not completely unrelated to government policy.
Source data table 3, column 5 gives “Government supported training & employment programmes” wherein any alleged workfare would be found. Numbers are 113,000 in Dec 2014 down from 131,000 in May 2010. So even if that were all workfare, it wouldn’t explain the strong growth in jobs.
Simon McGrath@
People who don’t hold your point of view are trolls ?
@Malcolm Todd
“There’s a lot wrong with the labour market, including all the things that Zygmunt mentions.”
In which case would you be good enough to give a source for all those things, as Joe asked for, but which Zygmunt has failed to do?
Apart from the difficulties with things like sanctions highlighted by Zygmunt, there are also little matters such as classifying new jobs with lower hours and less pay as equivalent to full time jobs with good wages.
Simon (McGrath) has the answer to the zero hours contracts conundrum in his link. whilst the Labour Force Survey asks workers if they are on the contract, The Business Survey studies the contracts themselves. whilst the former estimates 622,000 workers are on the ZHC the Business Survey estimates between 1.2 and 1.7 million. In addition it was found that a further 1.3 million contracts did not supply any hours whatsoever. So even if we split the difference and say that roughly a million people are on ZHC then it still exposes a huge number of people being employed without the security of contracted hours.
And then of course, you still have over a million contracts where there are no hours at all !
@Tsar Nicolas
“Apart from the difficulties with things like sanctions highlighted by Zygmunt, there are also little matters such as classifying new jobs with lower hours and less pay as equivalent to full time jobs with good wages.”
Logic dictates that “new” jobs will tend to pay less than the prevailing average rate of pay (think it through).
In the light of that, what point, exactly, are you trying to make? That static unemployment would be better than falling unemployment?
Simon Shaw
“In the light of that, what point, exactly, are you trying to make?”
That the unemployment figures, as well as being inaccurate, are not telling the whole story. That people are much worse off than they were five years ago.
It is certainly very welcome that unemployment has not spiralled and, more importantly, the Coalition has not made the mistakes of the past where people have simply been allowed to, ‘drop out,’ and end up on long-term benefits. Zero hours is not even a particular affront for me (although it can be a problem). But low pay is a problem. I’ve no idea what the answer is – but when work doesn’t put a roof over your head it is a problem in need of resolution.
“But low pay is a problem. I’ve no idea what the answer is – but when work doesn’t put a roof over your head it is a problem in need of resolution.”
1) Increasing the minimum wage, but within the recommendations of the Low Pay Commission;
2) Implementing the Universal Credit properly so that people have the incentive to move into more and better paid work;
3) Cracking down on abuses of zero hours contracts;
4) Improving skill levels among those from lower income families through better outcomes at school, in vocational training and improved uptake of university places;
5) Improving job opportunities generally by rebuilding output in better paid areas like manufacturing and having a more buoyant economy overall;
6) Improving access to affordable housing.
Basically, all stuff the Lib Dems have started to do already and are committed to do more of if they become part of the next government after May. There are no easy solutions and just simply saying “force employers to pay more” is economically illiterate and doomed to fail. We have to work intelligently with the market to steer it to the outcome we want – a decent living standard for all, not dependent on increased, unaffordable spending on benefits.
If Simon’s logic is correct when he says that ‘Logic dictates that “new” jobs will tend to pay less than the prevailing average rate of pay (think it through),’ the aim of any government to help create a high added value, high wage economy must be doomed to failure and the raison d’etre of the Liberal Democrats to create a society where no-one shall be enslaved by poverty must surely be doomed to failure. That really would be a philosophy of despair.
@David Evans
“If Simon’s logic is correct when he says that ‘Logic dictates that “new” jobs will tend to pay less than the prevailing average rate of pay (think it through),’ the aim of any government to help create a high added value, high wage economy must be doomed to failure”
Why? I would have said that the most common (logical) progression is Unemployed –> Entry Level Job (ie paying less than the average rate of pay) –> High Wage Job.
Are you saying you think the progression is a straightforward Unemployed –> High Wage Job?
New jobs (i.e. expansion of existing companies and start-up’s) are inherently risky and so you keep costs low. If these ventures do well then wages/hours grow or employees gain experience and get a step up the ladder to a better job. This is a well-worn path, no?
With the crash people have been less likely to look for alternative work for fear of being left with no work and I personally think the move to 2 years work before amassing full employment rights has exacerbated this somewhat. For me these figures are welcome and I think show that more is going right than wrong (fingers cross this translates to votes!)
Simon Shaw
What a scam you support. The ideal solution for the owners of capital is to make millions of people redundant and then re-employ them on an entry level basis.
Simon, there is no requirement that the unemployed are the only ones move into new jobs, or even that they are the majority of those who move into new jobs. Equally in a society where education standards are rising, new graduates would often enter jobs with above average wages whether new job or not, directly from being unemployed. Your whole logic seems to be based on some massive oversimplification of how economics and the job market works.
Tsar Nicolas 20th Feb ’15 – 10:15am
“…for the owners of capital is to make millions of people redundant and then re-employ them on an entry level basis.”
What you describe is not the ideal solution. But it does look remarkably like Coalition policy.
I laugh when I hear Ministers talking about how they have “created” private sector jobs.
What they mean is that they sacked people working in the public sector and some of those people were then lucky enough to get a less well paid job doing exactly the same thing working for a privatiser who profits substantially from the deal and then turns up to The Black and White Ball to make a donation to The Conservatives.
To be honest, I ‘m always a little suspicious when rafts of good news arrive just in time for election campaigns.
I should declare an interest here. I’m just back from signing on, having been unemployed for over 3 years. Apparently the number of unemployed women aged 50-64 has increased by 30% since 2010. This does not augur well for me, being in the middle of this age range. Only this week I was rejected after an apparently successful interview, because other candidates had ‘better or more up to date knowledge or experience’. If I apply for basic clerical posts, I am rejected as overqualified/over-experienced /the post wouldn’t make best use of my skills/the post wouldn’t be challenging enough. If I apply for posts commensurate with my abilities & experience, I fall down because I don’t have some of the desirable criteria, usually a particular bespoke piece of software. It’s all very depressing; I don’t quite have 35 qualifying years (why can several part-years not count as equivalent to one?), so have to keep signing on and jumping through all the hoops just to get my NI credits. I feel hassled – there is a fine line between ‘support’ and harassment – and my money is running out. Plus, although it is illegal, I’m certain that I am a victim of age-discrimination. So it’s good to know that unemployment is falling, but from where I’m standing, I can’t see it.
Simon Shaw
You misunderstand me, I think. I wasn’t endorsing Zygmunt’s figures and have no idea where he(?) got them from. I think it’s pretty undeniable that Workfare, abuse of zero-hours contracts and disabled people being harassed off long-term benefits are all serious problems; but they weren’t invented by or under this government and they don’t wipe out the good things that are happening in terms of overall un/employment.
Tsar Nicholas
“the unemployment figures, as well as being inaccurate, are not telling the whole story … people are much worse off than they were five years ago.”
Indeed. I remember the good old days — the recessions of the 1980s when I was about to leave school and the 1990s when my children were just born. Back then if you were one of the majority still in work you were pretty much okay; but it was a bit of a shame about the millions of unemployed (and in those days, they massaged the figures by shoving the unemployed onto invalidity benefit, believe it or not).
There are hard times again, and yes, surprise surprise, the very rich are able to defend their pile very successfully. But I think I prefer the way this recession has distributed the pain among the rest of us to the models of the past.
I find it telling that the two graphs totally disagree with each other. The first shows a massive fall in the number of unemployed, the second only a marginal increase in employment. So we are not getting the full story…
I was previously unemployed and obtained a job during the coalition government’s term of office. So I’m biased when I say that falling unemployment is a good thing. I agree that zero-hours contracts are a problem, primarily because they interact with the benefits system chaotically (meaning people lose benefits because they were working last month when actually they’re not working this month and by the time the system corrects itself they’re in arrears and facing eviction, for example).
@Roland
“I find it telling that the two graphs totally disagree with each other. The first shows a massive fall in the number of unemployed, the second only a marginal increase in employment. So we are not getting the full story…”
Incorrect. The two graphs appear to be totally compatible. You need to look more closely at the figures on the respective Y-axes.
Thanks Simon! Just goes to show the problem that the bottom graph in having much a compressed Y-axis does make the increase seem more of a minor deviation. However, I would be interested in knowing more about the ‘hidden’ data. Because we do have a rather large pool of “economically inactive” people, also the other area of high unemployment in recent decades has been the 50+ aged group.