Tony Dolphin: If the UK is in Recession, How Come Employment is Increasing So Rapidly?
The latest employment figures, published today, do little to resolve the conundrum over the UK’s unusual combination of strong employment growth and no economic growth.
Over the last year, real GDP has fallen by 0.5%, while employment has increased by 510,000 (and private sector employment by 824,000).
The conundrum is not quite as great as the raw data suggest. For a start, GDP in the latest quarter was affected by the extra bank holiday for the Queen’s jubilee. Without that, real GDP would probably have been roughly unchanged over the last year. And private sector employment growth was boosted by 196,000 thanks to the reclassification of FE and 6th form colleges; underlying private sector jobs growth was ‘only’ 628,000.
The puzzle diminishes further when we dig into the details of the employment data. Over half the increase in employment over the last year is accounted for by the self-employed, unpaid family members and people on government work schemes. The number of employees over this period has increased by 241,000. Furthermore, while the number of part-time employees increased by 195,000, the number of full-time employees was up by just 46,000…
The number of people out of work fell by 50,000 to 2.53 million in the three months to August, according to the Office for National Statistics ONS.Employment reached a record high of almost 30 million, while the unemployment rate fell to 7.9%.
The ONS also said the number of people claiming Jobseekers Allowance fell by 4,000 to 1.57 million in September.
The number of people in employment has not been higher since records began in 1971.
The employment rate for those aged from 16 to 64 for the three months to August was 71.3% – which is the highest since April 2009. But the percentage of those in employment is still lower than the peak of 73%, which was recorded in 2008 before the peak of the financial crisis and ensuing recession.
The BBC’s economics editor, Stephanie Flanders, points out that there are also more people in the UK than ever before.
ONS – Labour Market Statistics, October 2012
- The employment rate for those aged from 16 to 64 for June to August 2012 was 71.3 per cent, up 0.5 from March to May 2012. There were 29.59 million people in employment aged 16 and over, up 212,000 from March to May 2012.
- The unemployment rate for June to August 2012 was 7.9 per cent of the economically active population, down 0.2 from March to May 2012. There were 2.53 million unemployed people, down 50,000 from March to May 2012.
- The inactivity rate for those aged from 16 to 64 for June to August 2012 was 22.5 per cent, down 0.3 from March to May 2012. There were 9.04 million economically inactive people aged from 16 to 64, down 138,000 from March to May 2012.
- Between June to August 2011 and June to August 2012, total pay (including bonuses) rose by 1.7 per cent and regular pay (excluding bonuses) rose by 2.0 per cent.