IEA economist responds to latest ONS labour market data
16 November 2021
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In the Media
In the Media
Annabel Denham writes for The Spectator
16 November 2021
Economic Theory
Commenting on the data, published today, Professor Len Shackleton, economist and labour market expert at the Institute of Economic Affairs, said:
“The good news from the labour market keeps on coming, with unemployment and redundancies down again in July-September, while October data on payroll employment and vacancies suggest that the end of furlough has not yet led to a significant change in this broadly favourable picture.
“One particular sign both of the vibrancy of the jobs market and rising confidence among workers is the record number of job-to-job movements. Such switches tend to be associated with faster productivity growth over time.
“However, all is not necessarily positive. Employment has been growing faster in the public sector than the private sector, and the total hours worked and the numbers in self-employment remain below the pre-pandemic level. There may still be a post-furlough spike in unemployment as periods of notice come to an end.
“Some see inflationary danger in the latest figures for annual earnings growth, 5.8 per cent in July-September. However, as the ONS cautions, this may in part be a reflection of the base in the corresponding period last year (when wages had fallen) and of the compositional effect as more low-paid than high-paid jobs were lost. Temporary increases in pay may be a symptom of a labour market that is readjusting to a changed economy rather than part of a sustained upward rise in wages and prices.
“Given continuing uncertainty and flux, it is probably best that interest rates are not rising just yet. It would also be a good idea if the Prime Minister and other spokespeople stop fuelling speculation about a further possible lockdown. If there is an expectation that Christmas may be impacted, much of the current labour market optimism could quickly evaporate.”
ENDSNotes to editorsContact: Emily Carver, Head of Media, 07715 942 731IEA spokespeople are available for interview and further comment.
“The good news from the labour market keeps on coming, with unemployment and redundancies down again in July-September, while October data on payroll employment and vacancies suggest that the end of furlough has not yet led to a significant change in this broadly favourable picture.
“One particular sign both of the vibrancy of the jobs market and rising confidence among workers is the record number of job-to-job movements. Such switches tend to be associated with faster productivity growth over time.
“However, all is not necessarily positive. Employment has been growing faster in the public sector than the private sector, and the total hours worked and the numbers in self-employment remain below the pre-pandemic level. There may still be a post-furlough spike in unemployment as periods of notice come to an end.
“Some see inflationary danger in the latest figures for annual earnings growth, 5.8 per cent in July-September. However, as the ONS cautions, this may in part be a reflection of the base in the corresponding period last year (when wages had fallen) and of the compositional effect as more low-paid than high-paid jobs were lost. Temporary increases in pay may be a symptom of a labour market that is readjusting to a changed economy rather than part of a sustained upward rise in wages and prices.
“Given continuing uncertainty and flux, it is probably best that interest rates are not rising just yet. It would also be a good idea if the Prime Minister and other spokespeople stop fuelling speculation about a further possible lockdown. If there is an expectation that Christmas may be impacted, much of the current labour market optimism could quickly evaporate.”
ENDSNotes to editorsContact: Emily Carver, Head of Media, 07715 942 731IEA spokespeople are available for interview and further comment.
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