The People Bulletin

The most recent statistics released by the Office of National Statistics suggest a further deterioration in the UK labour market.

The statistics showed:

• Unemployment grew by 80,000 between April and the end of June, raising unemployment to 2.51 million.
• The number of people claiming Jobseeker’s Allowance rose by 20,300 in August. This was the sixth successive month of increase, taking the claimant total to 1.58 million.
• The number of people in employment fell by 69,000 in the quarter to July.
• The number of job vacancies in the three months to August continued to fall to 453,000.
• The number of redundancies rose over the quarter, with public sector workers and women being worst affected.

 Commenting on the statistics, Nigel Meager, director of the Institute for Employment Studies, said:

“Despite a few false dawns in recent months, the UK labour market remains in the doldrums. Since the recession began in 2008, unemployment grew less than many commentators expected to nearly 2.5 million by May 2009. However, it has stubbornly remained at that level for over two years. Similarly, the number of job vacancies fell from around 700,000 to 425,000 in the first year of recession, but has been stuck below 500,000 for the last two years.

“[These] figures raise a real concern that, after two years bumping along at this low level of demand, the jobs market, rather than entering a recovery stage, is about to take a turn for the worse, with all the key figures moving in the wrong direction. The early impact of the public sector cuts is also now starting to show in the figures and, for the first time this quarter, public sector job loss now considerably outweighs any growth in the private sector.

“None of this is at all surprising given the state of the macro-economy. It’s now three-and-a-half years since the onset of recession. At the same point following each of the last two recessions in the 1980s and 1990s, GDP was back above its pre-recession level, while this time national output is still languishing about 4 percentage points below that level.

 “Informed commentators have drawn attention to the chronic lack of demand in the labour market for several months. It’s probably too late to stop a surge in unemployment in the autumn and winter ahead, given that much of the impact of spending cuts is yet to come, and the spending power of those in work is being tightly squeezed by inflation. But urgent action is needed to avert more lasting labour market damage, especially to young people, and to those with low skills, who may never fully recover from an extended period of unemployment.

“It’s hard to avoid the conclusion that policy-makers now need to stop sitting on their hands and start looking for ways to get spending power into the economy quickly. Many of the interventions commonly floated won’t do this: recent experience suggests that another round of quantitative easing will simply swell the balance sheets of the banks, while there’s no evidence that reducing top tax rates will help. Other growth-enhancing measures to support investment, innovation and skills, although worthwhile, will take years to have an effect. What we need now are interventions to address the immediate jobs deficit, which arises from lack of demand. Common sense suggests that stemming the loss of jobs will require some kind of fiscal stimulus (such as a VAT reduction), perhaps also coupled with a slowing of the pace of deficit reduction”.

www.ons.gov.uk/ons/rel/lms/labour-market-statistics/september-2011/index.html

www.employment-studies.co.uk/main/index.php