UK labour market: further small steps in the right direction, but still a long way to go

Press Releases

31 Aug 2012

Nigel Meager, Director of the Institute for Employment Studies, comments on today’s jobs figures from the Office of National Statistics:

‘Although it’s important not to get too excited by month-to-month changes in official statistics, today’s figures, when taken with those of the last three to four months, show another move in the right direction, with all the key indicators recording positive changes.’

  • Employment is up by 263,000 in the quarter to July 2012, with over half of this growth among part-timers
  • The headline unemployment figure is down slightly by 7,000 on the quarter to July 2012. The more recent figure for those claiming Jobseekers’ Allowance also fell slightly by 15,000 during August.
  • The month also saw small positive changes in the indicators of demand for labour from employers, with redundancies down and job vacancies up.

Mr Meager continues:

‘On the face of it and set alongside the dire GDP data, which continue to show the macro-economy flat-lining in double-dip recession, these figures confirm once again the remarkable resilience of the UK labour market. There are, however, some important caveats to be made.

‘First, the employment figures to July include the period during which any temporary effect from the Olympics will have been felt; it’s notable that the increase in employment was particularly strong in London. It’s possible that this effect will start to drop out of the statistics in the coming months.

‘Second, as well as part-time employed, around a quarter of the increase in employment is among self-employed people (many of them, in turn, working part-time). Self-employment is now at record levels (nearly 4.25 million). Not enough is known about these new self-employed: optimistically, they might turn out to represent a real entrepreneurial private sector upsurge among the UK workforce; equally likely, they may represent people turning to freelance work, often on a part-time or casual basis, because of the difficulty of finding more substantial work in the current climate.

‘Third, the recent improvement in employment is much larger than the fall in unemployment – a lot of new jobs are clearly not going to the unemployed themselves. Particularly worrying is the fact that alongside these otherwise positive trends, the number of long-term unemployed has continued to grow strongly, and now stands at over 900,000. A key challenge for the government is to ensure that this group does not get increasingly sidelined as the labour market cranks back into action.

‘Last, despite these improvements, there is still a long way to go. GDP remains well below pre-recession levels, in the longest and most sustained downturn in living memory. Despite the latest improvements, unemployment remains at 2.6 million, and it has sat in the 2.4-2.6m million range for over three years. If we are to return to pre-recession levels of unemployment (around 1.5 million) an effective economic growth strategy is essential. It is simply not possible to keep creating meaningful, productive jobs in the absence of a significant upturn in GDP. As the Business Secretary has recently pointed out, the real economic problem facing UK business remains a lack of demand in the economy.’

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For more information, or to arrange further interview with Nigel Meager, please contact Lorna Howes on 01273 763414 or lorna.howes@employment-studies.co.uk

About Nigel Meager:

Nigel is a labour economist by training, and a well-established international expert on labour market and employment policy issues. He has worked at IES since 1984, following posts at the Universities of Bath and Glasgow. He has been Director of the Institute since 2004. He has a long and varied research track record covering the functioning of national, regional and local labour markets, unemployment, skill shortages, labour market flexibility, changing patterns of work and equal opportunity policies and practices.

About IES

The Institute for Employment Studies is the UK’s leading independent, not-for-profit centre for research and evidence-based consultancy on employment, the labour market, and HR policy and practice. Visit www.employment-studies.co.uk