Archive for the ‘Employment’ Category
Thursday, July 29th, 2010
The government has just started a consultation process with the view of scrapping the fixed retirement age from October 2011. This would mean that employers would no longer be able to ‘force’ workers to retire at age 65, as they can, and usually do, at the moment.
The bad news is that you have to have a job in the first place. Unlike the 2.47 million who are currently unemployed in the UK. We should also not forget the 1.08 million who have to take part-time work because they cannot find any full-time employment.
Charities and organisations that have been fighting against “age discrimination” are obviously delighted at the news, as are many older workers who don’t want to end up on the ‘scrap heap’ at age 65.
Although the government will be highlighting this “anti-discrimination” argument, it will have the underlying reason that this move makes economic sense. With a steadily ageing population the demands on the public finances are immense, for support, pensions and health care. With more people being able to work longer, and finance themselves more easily, there will be fewer costs to the exchequer.
Not only that, there will also be more people paying taxes at the same time as they are receiving their state pension, which will boost the economy as well as government finances. The ‘grey pound’ is already a growing part of consumer expenditure and is now set to become even more so.
On the down side, it could be argued that there will be fewer opportunities for younger people to obtain jobs if fewer people are retiring. Some employers feel that the change may add to their costs and that it will make workforce planning more difficult, not knowing the date at which older people will terminate their employment. Some also put the argument that older workers are less productive although there is no evidence to back this assertion. In fact some companies have been deliberately targeting older workers who they feel offer a better interface with customers, than those who are just out of school.
Tags: Age discrimination, ageing population, Employment, productivity, Public Finances, retirement
Posted in Employment, Population, Public Finances, labour markets | No Comments »
Tuesday, July 6th, 2010
The latest Economic Survey from the British Chambers of Commerce suggests that there was continued growth in the second quarter of 0.6% to 0.7%.
The survey, which is based on data collected from over 5,600 businesses throughout the country found that domestic manufacturing sales surged by 29 points in the second quarter to +30% and manufacturing export sales rose by 11 points to +31%. This latter figure is the highest level for four years.
Employment in manufacturing rose 35 points to +19% although services only increased by 1 point to +4%. There was also a big increase in the number of manufacturers reporting pressure on prices.
David Kern, Chief Economist at the British Chambers of Commerce said:
“The UK’s economic recovery is consolidating, and these results support the view that GDP growth strengthened in the second quarter of 20-10. However, the recovery is fragile and is not yet secure.
“Despite an improvement in manufacturing, the sector still faces serious risks. Given the sector’s poor long-term historical record, it is much too early to conclude that we are now seeing a sustainable manufacturing upturn. The service sector, which accounts for the bulk of GDP in the UK, is not recovering at an adequate pace and this heightens the threat of an economic setback.
“This quarter’s poor cash flow data, in both manufacturing and services, indicates that many businesses are still facing serious financial difficulties. Investment and confidence levels remain disappointing across all sectors.
“Many of the factors driving growth this year, mainly stock building and the continued effects of the policy stimulus, are only temporary. As a result, the threats of a relapse remain serious, and countering these threats to growth must remain a priority for policymakers.”
Tags: economic growth, Employment, GDP, Manufacturing, Pricing, services
Posted in Employment, GDP, Manufacturing, Pricing, Service Sector, economic growth | No Comments »
Thursday, June 17th, 2010
The unemployment rate for the three months to April 2010 was 7.9% which was an increase of 0.1%. There was an increase in the number unemployed of 23,000 to give a total of 2.47 million out of work. This is a bleak figure which looks set to become even bleaker. Particularly so, given the fact that there are 5.2 unemployed people per vacancy at the moment.
On the other side of the coin, the number of people claiming Jobseeker’s Allowance (also called the claimant count), actually fell by 30,900 between April and May to reach 1.48 million. This is the first time this measurement has fallen below 1.5 million since March 2009. This may be because more people are being put on training courses and some of those who are losing their jobs may not be eligible for Jobseeker’s Allowance.
Also, according to the ONS, the number of people who are economically inactive, which means that they are out of work but not seeking employment, actually increased by 29,000 during the three months to April. This means that the total of the economically inactive has now reached 8.19 million which is equivalent to 21.5% of the working population.
At the same time, there was a small increase of 5,000 in the numbers employed in the three months to April. But, the number of full-time workers fell by 56,000 over the quarter whilst the number of part-time workers increased by 61,000. The number of those working part-time because they cannot find a full-time job rose by 45,000 over the quarter, and now totals 1.08 million, which is the highest figure since comparable records began in 1992.
The employment situation is a mess and about to get worse. The government’s austerity cuts are already biting. Just yesterday, one of my friends lost her job in education, because “funding has been cut for next year” within the local authority. Of course, the more public sector workers lose their jobs the lower government spending will be on the surface. But then there are all the unemployment benefits which will have to be paid added to the loss of income tax and national insurance which the out-of-work will no longer be paying.
With growth figures being slashed, we are not going to be rescued by the private sector, especially as other governments, especially in Europe, are taking the same sort of austerity measures. If markets dwindle, employment will fall even further. I had a job application this morning from someone who has a “starred” First Class degree and is currently working as a waiter. Your guess is as good as mine as to where it is all going to end.
Tags: Employment, Public Finances, unemployment, unemployment rate
Posted in Employment, Public Finances, economic growth, government borrowing, government spending, unemployment | No Comments »
Thursday, May 27th, 2010
This is the headline figure published today by the British Retail Consortium following a study carried our by the Centre for Economics and Business Research using its model of the UK economy.
They found that an increase in VAT to 20% from its current level of 17.5% would result in the loss of 163,000 jobs over four years and a reduction in consumer spending of £3.6bn.
Such an increase in VAT would be appealing to the government as it would reduce the deficit by £11.3bn by the end of the first year at the stroke of a pen. However, the Chancellor, George Osborne, did seem to suggest this week that he was not planning to raise VAT. But, you never know.
 Will the government take the easy route of raising VAT? According to the BRC such a rise in VAT would cost 30,000 jobs in the UK in the first year alone, across all employment sectors. The initial effect of an increase in an indirect tax such as VAT, is to push the supply curve upwards and to the left. This will result in an increase in market prices and a fall in quantity demanded, depending on the elasticity of demand for the various taxed goods.
The tax will serve to reduce companies’ margins, and the incidence will be greater upon them the more elastic is the demand for the product. As margins are squeezed, costs may be cut and fewer people employed.
BRC Director General Stephen Robertson summed up by saying: “The budget deficit is serious. It has to be tackled but proposals must be judged against the implications for jobs and growth revealed by this new information.”
“Business growth will get the country out of the hole it’s in, led by retail. The government must now deliver a route to stability that supports companies and customers by avoiding damaging tax rises.”
Tags: consumer spending, Elasticity, indirect taxation, Microeconomics, tax incidence, unemployment, VAT
Posted in Employment, Public Finances, taxation, unemployment | No Comments »
Thursday, May 20th, 2010
Between 2000 and 2009, employment in the agricultural sector in the EU27 fell by 25%, which was the equivalent of 3.7 million full-time jobs. It fell by 17% in the EU15 (those countries in membership before 2004) and by 31% in the 12 member states (NMS12) that joined the EU in 2004 and 2007.
In 2009, total employment in the EU27 agricultural sector was equivalent to 11.2 million full-time jobs, of which 5.4 million were in the EU15 and 5.8 million in the NMS12.
 Agricultural employment is falling rapidly in the EU. Between 2000 and 2009, real agricultural income per worker increased by 5% on average in the EU27 according to figures just released by Eurostat. But this average is rather misleading. The new member states gained immensely with incomes in the NMS12 rising by 61% whereas incomes in the EU15 actually fell by 10%.
The Common Agricultural Policy has always been something of a problem to UK governments as such a large percentage of total EU expenditure has gone into agriculture in the past. Since the UK has a small but highly efficient agricultural sector, this has not usually been to our benefit.
What is particularly interesting according to the latest figures, is that five EU countries account for nearly two-thirds of all agricultural employment in the EU27. Poland accounts for 20%, Romania 19%, Italy 10% and Spain and France both 9%.
However, the EU did resolve in 2008 to make changes to agricultural policy and the plan is to continue to reduce direct payments to farmers and to transfer the money saved into a fund for the development of rural regions.
The proportion of the EU budget devoted to the CAP has fallen from a peak of nearly 70% in the 1970s to 34% over the 2007-13 period. This is partly due to the expansion of the EU in other directions, cost savings from reforms plus the new focus on rural development which will be allocated 11% of the CAP budget over the 2007-13 period.
Tags: Agriculture, Common Agricultural Policy, Employment, European Union
Posted in Agriculture, Employment, European Union | No Comments »
Thursday, May 13th, 2010
The unemployment rate was unchanged at 8.0% in the three months to March 2010. But the number of unemployed increased by 53,000 over the quarter to reach 2.51 million. This is the highest figure since the three months to December 1994.
Figures were also published by the Office for National Statistics yesterday to show that the number of people classed as economically inactive, that is those out of work and not seeking work, has risen by 88,000 to reach 8.17 million. This is the highest total since records began in 1971 and includes students, those acting as carers for relatives and those who have simply given up seeking work. There has doubtless been an increase in the number of discouraged workers who have simply given up looking for a job in the current climate.
There are also an increasing number of people who have been unemployed for 12 months or more. This figure increased by 94,000 over the quarter to reach 757,000 which is the highest figure since the three months to May 1997. Given that the number of people out of work for up to six months actually fell by 52,000 this suggests that we have nearly three quarters of a million long-term unemployed who are finding it virtually impossible to get back into the job stream. This is probably due to a mismatch of skills compared to current demands by businesses.
Whilst the Labour Force Survey measure of unemployment shows a worsening picture, the number of people claiming Jobseeker’s Allowance, also known as the claimant count, continues to improve. This has now fallen for the last three months and for five out of the last six months, and between March and April fell by 27,100 to reach 1.52 million. These falls could be due to the active government initiatives to place the unemployed on training courses.
The employment rate for the three months to March 2010 was 72.0% which was down 0.3% on the quarter and was the lowest level since the three months to September 1996. The number of people in employment fell by 76,000 on the quarter to reach 28.83 million.
There was a fall in the number of full-time workers of 103,000 while the number of part-time workers rose by 27,000 over the quarter. The number of people who are now working part-time because they cannot get full-time work increased by 25,000 over the quarter to reach an amazing total of 1.07 million, which is the highest figure ever recorded. This shows the extent of underemployment within the economy, but also its flexibility, which has meant that the headline unemployment figure is much better than it could have been.
Comparatively, the UK’s unemployment rate of 8.0% is superior to many other nations. The OECD average for March was 8.7% whilst the EU recorded 9.6% and the euro area was 10.0%. Other significant figures show the rate in Ireland at 13.2%, Spain at 19.1% and the US at 9.7%,
Bad news in the short term is that the number of job vacancies fell by 6,000 to 475,000, which is the first quarterly fall since last autumn. In addition, public sector employment rose by 7,000 in the last quarter of 2009, whilst private sector employment fell by 61,000. So, at a time when Gordon Brown was talking about the need to curb public sector employment it was growing to 6.1 million. I’m sure the new coalition government will have something to say about that.
Tags: Employment, job vacances, long-term unemployment, underemployment, unemployment
Posted in Employment, unemployment | No Comments »
Thursday, April 22nd, 2010
The latest unemployment figures take a bit of unravelling. The headline figure for the three months to February, using the Labour Force Survey measure, was up by 43,000 over the quarter to reach 2.5m. This is the highest figure since 1994. This gave an unemployment rate of 8.0% which was up 0.1% on the previous quarter. This is bad news.
However, the number of people claiming Jobseeker’s Allowance, which is also known as the claimant count, actually fell by 32,900 between February and March 2010 to reach 1.54m. This is a bigger fall than anticipated and this measure of unemployment has now fallen for four out of the last five months. This is good news.
 Are things getting better or worse in the UK labour market? So, how then do we reconcile two figures which are moving in opposite directions. It seems that one major factor to the fall in those claiming Jobseeker’s Allowance is that a number of new training schemes have been put in place which are particularly aimed at young people, and which are at least temporarily, keeping them off benefits. Thus, they cannot be unemployed whilst they are being trained. In fact, official figures show that the number of people on government training and employment schemes has increased by 12,000 or 11.2% in the three months to February.
The question is, when the training is over will there be any jobs available? I have already blogged this week about the possibility of a jobless recovery and given the upcoming cull in the public sector it would appear that unemployment will rise further over the next year or so.
An additional factor which would back this up is the fact that there are now 1.05 million people working part-time – because they could not find a full-time job. This number increased by 13,000 over the past quarter. We therefore have a major problem of underemployment.
The significance of this is that these people are now classified as ‘employed’, and it may be as the economy picks up that they will get the first opportunity to move into full-time jobs as the companies they work for start to expand. But as they work more hours they will still just be amongst the already ‘employed’. The point being that the labour market could expand fairly quickly without reducing the unemployment figures.
So, the future changes in the labour market are going to be difficult to call. One positive note is that the number of vacancies for the three months to March 2010 was up 9,000 over the quarter to reach 475,000.
Finally, average earnings figures were also published yesterday. These show that the annual growth rate for regular pay, excluding bonuses, was 1.7% for the three months to February 2010, up from 1.5% in the three months to January. But, what continues to astound, is the difference between the private and public sectors.
When bonus payments are excluded, which mainly apply to the financial sector, growth in private sector average earnings stood at 0.9% compared to a whopping 3.9% for the public sector. Mr Brown is obviously being very generous to government servants, but the day of reckoning cannot be far off.
Tags: average earnings, Employment, private sector, public sector, underemployment, unemployment
Posted in Earnings, Employment, labour markets, unemployment | No Comments »
Wednesday, April 21st, 2010
So, inflation is still on the rise. The government’s target measure of CPI rose from 3.0% in February to 3.4% in March.
This was mainly due to the cost of gas and petrol prices and a spike in food prices. A weak level of sterling is coupling with very high prices for oil and other commodities, and on top of that poor weather in Spain has added to food prices. Also, there may be a knock-on effect on food prices as a result of the UK becoming a no-fly zone over the past week – with dwindling supplies of some foods in the shops.
The RPI measure of inflation was 4.4% in March, up from 3.7% in February. This was affected by the same factors as the CPI but also a rise in mortgage interest payments. RPIX inflation, which excludes mortgage interest payments, was up to 4.8% in March from 4.2% in February. The recent trend can be seen in the graphic below.
 Source: ONS The latest comparable figures for CPI inflation show that the UK rate of 3.0% in February was far higher than the 1.4% for the EU as a whole.
What then are the consequences of this continued rise in prices?
Firstly, savers are suffering. Real interest rates are actually negative at the moment, and according to the Moneyfacts website the average no-notice account after tax and inflation is standing at a very enticing minus 2.82%.
Secondly, there could be an impact on wages and employment. Wage growth has been very restrained in the private sector but many wage settlements take RPI into account. With some economists suggesting that RPI could rise as high as 5%, this is likely to put some pressure on wage settlements. Given the delicate nature of the recovery this could well have a major impact on employment.
Finally, how is the Bank of England going to react? There will certainly be pressure on the MPC to raise interest rates although the governor of the Bank of England, Mervyn King, has maintained that he expects inflation to full back towards its target level over the coming months. A hike in interest rates will doubtless damage the recovery. However, the measure for core inflation, which removes the more volatile items in the measure, only rose from 2.9% to 3% last month, so perhaps pressures are not as great as they seem.
Tags: Bank of England, core inflation, CPI, Inflation, Interest rates, MPC, RPI, RPIX, savings, wage rates
Posted in Bank of England, Consumer Price Index, Earnings, Employment, Inflation, Interest rates, Monetary Policy Committee, sterling | No Comments »
Wednesday, April 21st, 2010
“The recovery is underway but it will not be strong enough to bring the millions of new unemployed back to work” according to OECD Secretary-General, Angel Gurria, in a meeting with G20 labour ministers in Washington yesterday.
According to Gurria the major policy challenge is to balance two apparently contradictory needs: to tackle unacceptably high unemployment and simultaneously reduce unsustainably high fiscal deficits. “We expect 1.9% average GDP growth in the OECD area for 2010 and 2.5% for 2011. Much of the recovery is still policy-driven; but this can’t go on for long.”
“The OECD average fiscal deficit is close to 10% of GDP, while public debt is expected to reach 100% of GDP by 2011 (30 percentage points higher than before the onset of the crisis). Even if consolidation were sufficient to bring public budgets back to balance by 2017, debt-to-GDP ratios would still exceed pre‑crisis levels in most countries.”
 Will the recovery be sustainable initially with little increase in employment? On top of this OECD estimates also suggest that OECD countries may have lost over 4% of their output potential as a result of the crisis; half of it because of higher unemployment.
It is also felt that even in those countries that managed to contain job losses by widespread cuts in working hours, the short-term labour market outlook is not rosy. They face a serious risk of a “jobless recovery” because firms have ample margin to respond to the increase of demand by raising working hours before they start hiring new workers in large numbers again.
Gurria suggests three priorities. “First, support for labour demand needs to evolve from preserving jobs to jumpstarting job creation. Second, effective re-employment services, combined with adequate safety nets, have a key role to play in promoting a quick reintegration of jobseekers into jobs, while fighting poverty. Third, policies to prevent a “lost youth generation” are a must.”
Tags: Employment, hours worked, recovery, youth unemployment
Posted in Employment, OECD, unemployment | No Comments »
Monday, April 19th, 2010
Once we’ve decided to which political party we are going to say “squeeze me I’m yours”, we are then going to be well and truly squeezed. And those in the public sector are going to be squeezed more than most.
This prospect has led the Chartered Institute of Personnel and Development (CIPD) to say that more than half a million public sector jobs could be axed in the next five years.
This could lead to a 10% reduction in the public sector workforce which currently stands at 5.8 million.
John Philpott, Chief Economic Adviser for the CIPD said that it was “misleading” to suggest that the pain of job losses could be eased by a combination of pay cuts or short-time working.
He said: “This strategy has been successful in the private sector during the recession as a means of avoiding redundancies during a cyclical downturn in the economy but is not an effective response where long-term structural change is involved.
“An economy with almost 30 million people in work and in which tens of thousands of jobs are lost and created every year should be able to cope with a period of large scale public sector downsizing without this resulting in higher unemployment.
“However, a favourable outcome depends on a return to health of the wider economy and increased demand for labour from the private sector.”
In fact the UK has been applauded for its flexible labour market in the private sector, which has resulted in much lower unemployment than had been anticipated during the recession. This was due to many employees agreeing to short-time working, pay freezes and even temporary pay cuts.
However, the monolith that is the public sector has been virtually unscathed during the crisis, with increases in average earnings far outstripping those seen in the private sector. All political parties are saying that they will tackle the structural problems of the public sector. The private sector was squeezed during the recession, and the public sector will be squeezed during the recovery.
Tags: average earnings, private sector employment, public sector employment, recession, recovery
Posted in Earnings, Employment, recession | No Comments »
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