UK labour market recession one-year-on

UK labour market recession one-year-on: Puzzling claimant unemployment count is sole, tentative ëgreen shootí, against grim background of 0.7 million private sector jobs lost

Official labour market figures published earlier today by the Office for National Statistics (ONS) show a further steep rise in UK unemployment in the February-April quarter. John Philpott, Chief Economist at the Chartered Institute of Personnel and Development (CIPD) described the figures as ëgrim but not unexpectedí but added that figures for the number of people claiming Jobseekerís Allowance (the claimant count) were ëamazingly good given what we know about the state of the jobs market, though too puzzling to yet be seen as a genuine ëgreen shootí.

With todayís ONS figures covering the first full year since the labour market downturn started in 2008, Dr Philpott today particularly highlights:

Total employment down 0.4 million
Private sector employment down 0.7 million
Public sector employment up 0.25 million (5%)
Biggest impact of job losses hitting men and young people, when compared to women and the over 50s respectively
Impact on manufacturing would have been greater without efforts by employers to implement alternatives to redundancy.

Dr Philpott, analysing todayís figures, said:

Overall labour market situation and outlook

ìAnyone looking for green shoots of recovery in todayís jobs figures will have little to grasp at. The recorded quarterly fall in employment and rise in unemployment still ranks amongst the worst seen in the post-war era. Vacancies are drying up at a rapid rate and redundancies go on rising. The grim news thus continues, though this is not unexpected given the dire state of the economy at the turn of the year.

ìThere is little in todayís figures to suggest that unemployment will not rise above 3 million next year. The one glimmer of hope is the claimant unemployment count. Not only is the count increasing much more slowly than might be expected but remarkably the number of people flowing onto the count actually fell in May. If indicative of underlying economic factors – rather than the result of the way in which benefits are administered or a reduced propensity for unemployed people to sign on at Jobcentres - these claimant figures are amazingly good given what we know about the state of the jobs market, though too puzzling to yet be seen as a genuine ëgreen shootí.

A year of jobs market recession

ìThe horrible human impact of the first full year of the jobs recession is now known. In all 0.4 million fewer people are in employment. The toll on the private sector has been horrendous – almost 0.7 million jobs have been lost. The public sector by contrast has added more than 0.25 million jobs (a 5% increase) – although as the CIPD warned earlier this week the public sector is likely to shed 0.35 million jobs in the next five years.

ìThe burden of net job loss has fallen entirely on full-time employees. The total level of self-employment and part-time employment is broadly unchanged from a year ago. It has also generally been a ëman-cessioní. The redundancy rate for men has more than doubled. The number of men in work has fallen by 2%, the number of women in work by 0.6%. The number of men unemployed has increased by 45%, the number of women unemployed by a quarter. This pattern is mainly explained by the relative buoyancy of part-time employment and the growth in public sector employment, types of employment in which women are strongly represented.

ìYoung people aged under-25 have fared far worse than the over-50s, though the latter have seen relatively larger increases in unemployment because they have fewer education, training or employment options if they do lose their jobs. Migrants have also prospered relative to non-migrants. The number of UK born people in work has fallen by 1.8% during the course of the jobs recession so far, while the number of non-UK born people in work has increased by 3.5%.

ìThe manufacturing sector has shed 0.2 million jobs – a 6.7% decrease. The other big job shedding sectors are distribution, hotels and restaurants and finance and business services. These sectors each shed 2.8% of their workers. While this was a recession triggered in the finance sector, as in most previous recessions it is the real economy, and manufacturing in particular, that has suffered most. The amount of job losses in manufacturing is also noteworthy because this is the sector which has shown the greatest effort on the part of employers and workers to seek alternatives to redundancy, such as pay freezes, pay cuts and short-time working. Without such welcome action the impact of the recession on UK manufacturing employment might have been far greater still.

ìManufacturing workers have also experienced the fastest rate of decline in the rate of growth of average earnings since the recession began. Excluding bonuses, manufacturing pay-packets were increasing by an annual rate of just 1% in the year to April – much less than the 2.9% gained by those in private sector services and 3.5% in the public sector.î