UK labour market: further improvement but longer-term concerns

Press Releases

13 Nov 2012

Today's data from the Office of National Statistics suggest that the pick-up in the UK labour market is continuing. Nearly all of the headline indicators recorded positive moves.

  • Employment is up by 100,000 in the quarter to September 2012, evenly split between full-timers and part-timers, although self-employment which has been growing strongly for the last year fell slightly.
  • Unemployment fell by 49,000 in the quarter to September 2012, leaving the total at 2.51 million. The more recent figure for those claiming Jobseekers' Allowance increased slightly, however, by 10,100 in October, to 1.58 million.
  • The data also suggest improvements in labour demand from employers, with redundancies down by 22,000 on the previous quarter, and unfilled vacancies slightly up on the quarter (by 16,000).
  • Total weekly hours worked in the economy grew over the quarter to 945.3 million, almost reaching the pre-recession peak of February 2008.

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

‘Today's figures are further good news, suggesting gentle but continued improvement in the labour market situation. The only reason for caution lies in the October claimant count which rose slightly for the first time since the late spring. This indicator is more up-to-date than the others, raising the question of whether the picture will worsen again once the impact of factors such as the summer Olympics drops out of the data.

‘Overall, however, the figures show how resilient the UK labour market has been in the face of recession and savage spending cuts. GDP remains 4 per cent below pre-recession levels, but employment is now back above its pre-recession level. It's true that more of the jobs are part-time, but even allowing for this, the total number of weekly working hours in the economy is now also back to pre-recession levels.

‘There is still a long way to go, of course, on the unemployment front. The working age population has grown by over 1.5 million since the start of the recession, so the recent good employment performance is not nearly enough to get unemployment down to pre-recession levels. This could take several years of growth to achieve.

‘The other sting in the tail of the good employment performance relates to productivity. We now have more people working than before the recession, between them working the same number of hours as before the recession, but if the GDP figures are correct, they are producing significantly less than before. Labour productivity is falling, and real wages are also falling. There is a real concern that, as the economic recovery continues, the UK will follow a lower productivity, lower wage trajectory than before, and raises the question of whether we may now be starting to seeing the impact of years of under-investment in skills and capital.’


About the Institute for Employment Studies

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.