Unemployment falls and wages rise - but job quality still questionable

Wed, 18/03/2015 - 22:35 -- nick

The latest unemployment figures give pause for thought for those who believe in a UK recovery and those who don't.

Over the three months to January 2015 the Office for National Statistics (ONS) said that, although the number out of work went down by 102,000, the rate was stuck at 5.7% as the UK's working age population increased.

A drop of more than 200,000 in the number unemployed for more than a year is good news, but youth unemployment remains stubbornly high at over 16% and falling only slowly.

Nearly half a million fewer people are out of work than a year ago, and there was good news too on wages as they continued to outpace our low inflation rate, with people on average receiving rises of 1.8% including bonuses.

There is still a problem with the way wages are calculated by the ONS; they do not include the earnings of more than 4.5 million self-employed people who earn less on average than a full-time minimum wage employee, and improvements are likely to be overstated because of this.

Our current historic low inflation rate has been reached almost entirely due to plummeting petrol prices, and these are likely to remain volatile, meaning future prices - and inflation - could easily outstrip wages again soon. Few unemployed people can afford to use petrol meaning their personal inflation rates are higher than many other people's.

Don't forget that the coalition used low wage rises to justify the 1% annual increase in benefits that had spread poverty even further among the unemployed; now pay has seen an improvement will they step away from this measure?

For the neighsayers there is plenty of evidence that the upturn is stuttering, with wage rises falling back from last month's high of 2.1%, and little change to the proportion - 22.2% - who are economically inactive but not looking for work despite the government's aim to move more into the workplace.

Self-employment, a major issue during the recession as it rose to one-in-seven of the working population and covered up the struggles of many people who found no real paid work, had started to fall back as it looked like the recovery was creating proper jobs.

So the rise of 33,000 in the last three months - a third of all the jobs apparently 'created' - is a blow, and this figure should be watched closely in future to see if this goes on.

The huge rise of zero hours contracts under this government - there are now 1.8 million of them in the UK - also shows how the quality of jobs has gone down even as the headline figure looks like it is improving.

The story is likely to continue to unfold in many different ways.