Unemployment up to 7.9%

[Eastleigh Seagull]

He is right. We don't have enough manufacturing jobs. We have got to stop relying on places like China for simple little things. There is absolutely no difference between a CNC machine, Moulding machine here and machines in China, so why are we not manufacturing. Why can't these governments start investing in it. If we had proper manufacturing jobs that required proper skills in machining, CNC programming, we could be training our young people up and would not require the services of people from these other countries who in my opinion have driven wages down and do not have the required skills in Engineering, because it is trade at the end of the day.

The wages would go up and we would get a skill set back that has sadly almost dissapeared from this country. Sadly Mechnical Engineering is considered as a dirty job in this country. I don't think this is the case in places like Germany where Engineers are highly respected. Manufacturing also creates thousands more jobs as each company supplies different parts and services, unlike the service industry where only a few at the top make all the money.

There is no difference in the machines but there is in the people using them. If people in the uk were willing to work for a couple of quid a day then i am sure we could compete. Until that time it will always be cheaper to make low tech moulded goods in china.

The economy did need rebalancing as having around half those employed paid by the state clearly just isnt sustainable. What we need is more incentives for entrepreneurs to start up the small businesses which drive the economy and reduces unemployment.

 

[beorhthelm]

would not be enough job satisfaction for me

how very middle class of you.

 

[glasfryn]

how very middle class of you.

what the hell is middle class about that
I loved my job and loved walking away from lots of the contracts with some pride
how does that make me middle class
the only thing middle class about me is my mum once voted liberal after her and my dad struggled to get their first house she though it was what you do when you finally get your own house until she went to the first liberal ladies meeting ....she came home and never spoke of it again.

if you knew me would never call me middle class

 

[glasfryn]

There is no difference in the machines but there is in the people using them. If people in the uk were willing to work for a couple of quid a day then i am sure we could compete. Until that time it will always be cheaper to make low tech moulded goods in china.

The economy did need rebalancing as having around half those employed paid by the state clearly just isnt sustainable. What we need is more incentives for entrepreneurs to start up the small businesses which drive the economy and reduces unemployment.

I try not to buy stuff made in China the last thing I bought made there was a mower and the engine shaft snapped.

 

[sten_super]

I am.
If you look beyond the month-to month fluctuations, the employment rate at 71% of the working age population has been at around that level for nearly four years and is still well below its pre-recession level.

More worryingly, unemployment (ILO measure) has been at around 2.5m since Spring 2009 (having shot up from just over 1.5 million before the recession).

The apparently good employment figures are: a) not nearly enough to mop up the larger working age workforce; b) heavily dependent on under-employed part-timers, and insecure self-employed; c) accompanied by stagnant GDP which means that labour productivity has been falling -- not good news for longer-term growth prospects.
Also the apparent rebalancing of from public to private sector employment is partly due to several hundred thousand people in public services (mainly in parts of education and health) having been reclassified as private sector in the official stats.

Overall, the labour market is still in a bit of a mess.

I'd estimate that unemployment has risen by around 2 million from the pre-recession boom to where we are now - around 1m in the unemployment figures and 1m that are now classed as 'inactive'.

The economy was (more or less) at full employment during the boom through the 2000s - the problem is that a fair number of people were working in the public sector because the government of the time viewed that to be a better outcome than having them on the dole. This was (just about) affordable during that boom time, when massive revenues were rolling in from the financial services sector, but I'm much less convinced that it's sustainable during a 'normal' period of economic activity.

On your point about re-classification - I was aware that they'd done that for some schools, didn't know about the health service. Having looked at it, you are right - 196,000 of the 313,000 decline in public sector employment can be attributed to that.

the thing that gets me is the way the government keep harping on about those they have just hit with crippling drops in benefit payments and have said on many occasions that if they do not like the way things are they could find employment my question is where?
as I said before 2.4 does not go into 0.5 and things look like getting considerably worse when the doors open to the Bulgarians and the Romanians as they will take up the lower paid jobs and mop up anything in between.

I wouldn't trust this government to find their way out of a paper bag, let alone deal with structural unemployment. However I think you raise an interesting point; a major problem, particularly amongst the low-paid and relatively low-skilled jobs, is that a significant portion of the workforce (and, you could argue, the benefits system) have not adjusted to the impacts of globalisation (or EU membership, or whatever you want to blame it on). Making a massive sweeping generalisation, there are a lot of eastern Europeans that are willing to come to this country, live in more crowded conditions than the domestic population are used to, and take relatively low-paid jobs. You can argue whether the stick or carrot approach is better to incentivise people to work - the government clearly believe it's the stick.

By deduction, the only real jobs must be digging polluting coal from loss making pits, producing 'fine' cars like Morris Marinas and Austin Aggros whilst the germans and japs produced better cars from non striking factories, or building ships in yards with a plethora of strikes and demarcation disputes whilst the germans, finns and koreans produced better ships more cheaply.

Service sector jobs in 21st century UK don't count as real jobs apparently.

This is something that I always find odd - there is definitely a perception that service jobs aren't real jobs somehow. There isn't, per se, anything wrong with having an economy dominated by services; they can be very reliant on exporting expertise, but you could say exactly the same thing about manufacturing. I think the broader issue is that services jobs tend to be higher productivity, which means that i) you need less people to produce the same value of stuff and ii) there (tend) to be less jobs in the service sector for the low-skilled. There needs to be some clever thinking around how we can create jobs for the low-skilled, but there's nothing to stop those being service sector jobs.

 

[soistes]

I'd estimate that unemployment has risen by around 2 million from the pre-recession boom to where we are now - around 1m in the unemployment figures and 1m that are now classed as 'inactive'.

Not sure about this bit. My understanding is that, certainly during the 80s in particular, there was a tendency to massage the unemployment figures downwards by pushing people who were really, by any reasonable definition unemployed, into inactive categories (disability benefits in particular, but also early retirement). The post-97 Labour government, and the current government have been trying to reverse this trend, and push people in the other direction -- e.g. in the case of lone parents, by restricting access to benefits so they have to search for work when their kids are younger, and in the case of disabled people or people in receipt of incapacity benefit (and now ESA) making them pass tests of "fitness for work" (work capability assessment) and if they don't pass they move to JSA and are counted as unemployed. Similarly any trend towards early retirement has been reversed, partly because of later access to pensions and the falling value of pension pots, so there are fewer people in the 50-64 age group counted as inactive than before. Arguably therefore, for a given level of aggregate demand in the economy, the unemployment level is actually higher (and the economic "inactivity" level corresponding lower) than it would have been in previous recessions.

 

[beorhthelm]

... There needs to be some clever thinking around how we can create jobs for the low-skilled, but there's nothing to stop those being service sector jobs.

like, for instance, call center jobs?

btw there is another, less manipulatable stat for employment, which is the total hours worked. this is usful for stripping out the differences between part time and full time, clasification of people of benefits etc. i dont know the latest numbers but it has been rising continuously for some time.

 

[soistes]

btw there is another, less manipulatable stat for employment, which is the total hours worked. this is usful for stripping out the differences between part time and full time, clasification of people of benefits etc. i dont know the latest numbers but it has been rising continuously for some time.

Agree with this. Total hours worked is, in my view, the best indicator of actual labour input across the economy. Actually this figure is pretty static in the latest statistics, but it has been rising as you say, in recent months.
The downside of this, though, when you put it alongside the GDP figures (which have been stagant for some time) is that output per hour worked (i.e. labour productivity) has been falling. This is very unusual in an economy (supposedly) emerging from recession. In both of the last two recessions (early 80s and early 90s) we saw very strong productivity growth during and after the recession - one interpretation being that the recession stripped out low productivity businesses and surplus labour and what was left, alongside new businesses, was more dynamic higher productivity activity.

This time round something else is going on -- labour input is increasing, but it seems to be in low productivity, low earning sectors (quite a lot of the growth has been in self-employment, the evidence suggesting that much of this is not dynamic, entrepeneurial activity as the government would have us believe, but people who can't find real jobs, engaging in cash-in-hand odd-jobbing activity to make ends meet). The more the productivity gap between the UK and other advanced economies increases, the worse our underlying competitive position, and the worse it is for long-term growth prospects, in my view.

 

[sten_super]

Not sure about this bit. My understanding is that, certainly during the 80s in particular, there was a tendency to massage the unemployment figures downwards by pushing people who were really, by any reasonable definition unemployed, into inactive categories (disability benefits in particular, but also early retirement). The post-97 Labour government, and the current government have been trying to reverse this trend, and push people in the other direction -- e.g. in the case of lone parents, by restricting access to benefits so they have to search for work when their kids are younger, and in the case of disabled people or people in receipt of incapacity benefit (and now ESA) making them pass tests of "fitness for work" (work capability assessment) and if they don't pass they move to JSA and are counted as unemployed. Similarly any trend towards early retirement has been reversed, partly because of later access to pensions and the falling value of pension pots, so there are fewer people in the 50-64 age group counted as inactive than before. Arguably therefore, for a given level of aggregate demand in the economy, the unemployment level is actually higher (and the economic "inactivity" level corresponding lower) than it would have been in previous recessions.

It's a fair cop - I made the error of looking at inactivity rates for 16+ rather than 16-64. Looking at the age breakdown amongst most age groups inactivity is down - although in 16-17 year olds and 18-24 inactivity is up by 100,000 apiece since 2007, part of a longer-term (and worrying) trend.

The labour market statistics really do present a bit of a puzzle - compared to the 1990/91 recession (using 1993, the year in which the labour market bottomed out, as a comparison) the employment rate is higher, unemployment is lower (both the rate and level) and the inactivity rate is lower (although the level is higher). I think there's a combination of factors at work here; self-employment (particularly part-time self employment) is a much larger share of total employment than it was pre-recession, although conversely double-jobbing stats are only modestly above their pre-recession level. I also suspect there's a significant portion of the workforce on part-time or zero hour contracts that aren't really being picked up accurately in the stats.

 

[soistes]

The labour market statistics really do present a bit of a puzzle - compared to the 1990/91 recession (using 1993, the year in which the labour market bottomed out, as a comparison) the employment rate is higher, unemployment is lower (both the rate and level) and the inactivity rate is lower (although the level is higher). I think there's a combination of factors at work here; self-employment (particularly part-time self employment) is a much larger share of total employment than it was pre-recession, although conversely double-jobbing stats are only modestly above their pre-recession level. I also suspect there's a significant portion of the workforce on part-time or zero hour contracts that aren't really being picked up accurately in the stats.

Agree with all of this -- under-employment of various types is clearly part of the answer to the puzzle. But, as I said in response to another post, it raises important issues about the longer-term impact on productivity and growth potential as the economy (eventually) emerges from a slump.
Anyway -- a nice change to have a largely evidence-based debate on an NSC thread!

 

[sten_super]

Agree with this. Total hours worked is, in my view, the best indicator of actual labour input across the economy. Actually this figure is pretty static in the latest statistics, but it has been rising as you say, in recent months.
The downside of this, though, when you put it alongside the GDP figures (which have been stagant for some time) is that output per hour worked (i.e. labour productivity) has been falling. This is very unusual in an economy (supposedly) emerging from recession. In both of the last two recessions (early 80s and early 90s) we saw very strong productivity growth during and after the recession - one interpretation being that the recession stripped out low productivity businesses and surplus labour and what was left, alongside new businesses, was more dynamic higher productivity activity.

This time round something else is going on -- labour input is increasing, but it seems to be in low productivity, low earning sectors (quite a lot of the growth has been in self-employment, the evidence suggesting that much of this is not dynamic, entrepeneurial activity as the government would have us believe, but people who can't find real jobs, engaging in cash-in-hand odd-jobbing activity to make ends meet). The more the productivity gap between the UK and other advanced economies increases, the worse our underlying competitive position, and the worse it is for long-term growth prospects, in my view.

Yes, hours worked can be a decent indicator, although in reality it's showing exactly the same as the headline employment data in this case. The question is what's happening to productivity.

There are a few theories, but for me none of them really hold weight. The zombie firms idea has been pretty thoroughly debunked, but never made much sense to me - it stated that firms were surviving due to low interest rates reducing the cost of loan repayments; but at the same time there was a credit squeeze and a lack of availability of new credit. The most credible explanation that I've seen is that large-scale unemployment has not been made necessary due to reductions in real wage rates. Wages have held broadly constant (certainly during the initial fallout and recession) while inflation was toodling along, so real wages have fallen. Therefore wage bills (for the given number of workers employed) have fallen, allowing businesses to retain workers - this has been aided by the flexibility of workers willing to go onto part-time or zero hour contracts rather than give up their jobs altogether.