Jobs recovery remains anaemic

Press Releases

18 May 2011

The labour market figures released by the Office for National Statistics today continue the pattern of recent months, with a mixed picture from the various indicators, but little overall change. The headline unemployment figure from the Labour Force Survey recorded a small fall of 36,000 over the quarter to March, and unemployment still stands at just below 2.5 million. The more recent claimant count figure, recording the number of people claiming Jobseekers' Allowance increased slightly by 12,400 and remains just below the 1.5 million level.

The total number of job vacancies fell by 30,000 in the 3 months to April, and although there are still 469,000 unfilled vacancies in the economy, this total is only two thirds of the level at the beginning of the recession, and there are now more than five unemployed people for every vacancy compared with only just over two per vacancy before the recession.

Nigel Meager, Director of the Institute for Employment Studies commented:

‘The latest official employment figures provide further confirmation that the recovery in the UK labour market is faltering and somewhat anaemic.

‘It's now over three years since the start of the recession and we've yet to see a substantial fall in unemployment or sustained growth in employment. The UK is doing worse than many competitors in this respect: although we entered recession before most other countries, by early 2011 the UK unemployment total had fallen only 2% from its peak, compared with falls of 4% in France and Italy, 11% in the US and Japan, and 18% in Germany.

Mr Meager commented further:

‘The UK labour market showed considerable resilience in the early stages of the recent recession; despite the depth of the downturn, employment held up better than expected, and better than in previous recessions. Many businesses made efforts to retain staff during the downturn through pay freezes, short-time working and similar measures. There is, however, a sting in the tail, and we're now experiencing it. Because they didn't indulge in big layoffs, employers have plenty of staff capacity to cope with a moderate increase in business demand, without needing to recruit.

‘So the employment bath is filling slowly, with only a trickle of new jobs, as the economy stutters back into growth. The worse news is that big public sector job cuts will shortly pull out the bath plug, and overall employment levels may well fall again. This is not a good moment to be taking demand out of the labour market. It is highly implausible, in the immediate future at least, that new private sector jobs will absorb the staff being thrown out from the public and voluntary sectors. The problem is exacerbated by the reluctance, confirmed in several recent surveys, of private employers to hire ex-public sector staff.

‘The government is about to roll out its ambitious new welfare-to-work scheme (the Work Programme) aiming to find sustainable jobs for large numbers of the long-term unemployed and people previously on disability benefits. The success of this initiative, as the Work and Pensions select committee noted earlier this month, depends crucially on the overall state of the labour market, and on sufficient vacancies becoming available which are suitable for Work Programme participants. Today's labour market data raise serious doubts on this front, suggesting that the new scheme is being launched into very choppy waters.’