“Complacency about the UK labour market is unjustified”, warns IEA expert
“The employment prospect in this month’s labour market data is still steady-as-she-goes. Echoing the recent better-than-expected GDP figures, the figures as yet show little sign of a serious recession.
“The number of payrolled employees is up again, and is now well above pre-Covid levels, although the number of self-employed remains subdued and indeed the number of full-time self-employed was slightly down in the most recent data. The employment rate is unchanged, with the economic inactivity rate marginally down in the September-November period with activity gains for the youngest and the oldest workers. It is true that the unemployment rate has crept up slightly and hours worked have fallen a little, but these changes hardly register in terms of people’s experience. There are still plenty of jobs out there: vacancies are not as high as they were a few months back, but remain markedly higher than pre-Covid.
“As usual the picture is a bit more complicated, with some parts of the UK doing less well than others. While Scotland saw record high levels of employment, Wales saw a sharp fall. The highest unemployment rate was in the North East, with 4.7 per cent. The lowest was in the South West, at 2.1 per cent. This region also has the highest employment rate at 79.3 per cent, considerably above the national average of 75.6 per cent.
“With widespread unemployment not an imminent threat, more attention has naturally focused on pay. The most recent data suggest that regular nominal pay in the autumn was rising faster than it has been since the coronavirus period. Average regular pay growth for the private sector was 7.2 per cent in September-November, as against just 3.3 per cent in the public sector. Both are behind the rate of inflation, although for many workers this may have been offset by the government’s support provision. Those employees on universal credit, for example, have had an uplift which these figures don’t capture.
“It is the disparity between public and private pay which has been most remarked on. This is driving the large number of public sector strikes. There were 467,000 working days lost in November, the highest monthly figure for more than a decade. With further increases in strike activity in December and the New Year, we may expect disruption to employment in other sectors which are not directly involved, and this might lead to shorter working hours and even job losses.
“So, although the worst fears for jobs have yet to materialise, complacency about the UK labour market is unjustified.”