Wednesday, 20 January 2010

Unemployment down, Employment down

A complex picture on unemployment was unveiled in the statistics released today for September to November 2009. Total unemployment on the LFS measure dropped slightly by 7,000.

The claimant count of unemployment (those actually claiming Jobseeker's Allowance) fell by 15,200 - which suggests the increasingly stringent conditionality and compulsion is taking its toll on jobseekers.

However, the number of people in work fell by 14,000 in the quarter (to 28.9 million), so where have all these people gone? If 14,000 fewer people are in work and 7,000 fewer are out of work then that's 21,000 missing people . . . surely?

The answer lies in the number of people classed as 'economically inactive', which includes people who have taken early retirement or have given up looking for work. This increased by 79,000 in the quarter to reach a record high of 8.05 million, 21% of the working age population.

But behind the unemployment figures, another picture is emerging - those on involuntary short-time working (i.e. those who have cut their hours to stay in work). Today's figures revealed a fall of 113,000 in the number of people in
full-time jobs, to 21.21 million, compared with a 99,000 increase in part-time workers to 7.71 million.

Falling employment and increasing short-time working means less disposable income which is bound to filter through into tighter consumer spending. Likewise, average pay increased by 0.7% in the year to November 2009, while inflation hit 2.9% in December - further hitting the value of wages in people's pockets.

People falling out of claimant eligibility into the grey or black economy also means tax revenues are hit.

The true picture revealed today is not one of an economy that has 'turned the corner' or is 'on the up', but of an economy that is incredibly fragile.

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