Job opportunities likely to suffer as energy prices and taxes rise, warns IEA economist
15 March 2022
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Commenting on ONS labour market statistics, Professor Len Shackleton, Editorial and Research Fellow at free market think tank the Institute of Economic Affairs, said:
“Today’s labour market figures again paint a broadly positive picture, with the employment rate for November-January rising and the unemployment rate falling as economic activity returned to pre-Covid levels.
“Vacancies are at record levels, while the redundancy rate is at its lowest for many years.
“It is good to see economic inactivity among young workers falling again as more jobs become available; long periods of inactivity for those in their twenties can have a lasting negative effect on careers.
“Economic inactivity among over-50s, however, is rising. A separate ONS analysis suggests that an important element in this is people in professional occupations retiring earlier, buoyed with good pensions and enhanced savings accumulated during lockdown. While this will not be a problem for this group, in the longer term we may want older people to remain in employment rather longer to reduce the burden of dependency on the working taxpayer.
“Although nominal pay continues to increase, rising inflation has already cut the increase in real pay to a bare minimum.
“All these figures predate the Ukraine crisis, which may well seriously disturb trade and investment patterns. The increase in energy prices and higher tax rates are going to squeeze living standards, and this will reduce consumer spending in many areas. This in turn will tend to reduce employment opportunities, so it is very possible that over the next two or three months the prospects for the UK labour market will appear less rosy than today.”
ENDS
Notes to editors
Contact: Emily Carver, Head of Media, 07715 942 731
IEA spokespeople are available for interview and further comment.
“Today’s labour market figures again paint a broadly positive picture, with the employment rate for November-January rising and the unemployment rate falling as economic activity returned to pre-Covid levels.
“Vacancies are at record levels, while the redundancy rate is at its lowest for many years.
“It is good to see economic inactivity among young workers falling again as more jobs become available; long periods of inactivity for those in their twenties can have a lasting negative effect on careers.
“Economic inactivity among over-50s, however, is rising. A separate ONS analysis suggests that an important element in this is people in professional occupations retiring earlier, buoyed with good pensions and enhanced savings accumulated during lockdown. While this will not be a problem for this group, in the longer term we may want older people to remain in employment rather longer to reduce the burden of dependency on the working taxpayer.
“Although nominal pay continues to increase, rising inflation has already cut the increase in real pay to a bare minimum.
“All these figures predate the Ukraine crisis, which may well seriously disturb trade and investment patterns. The increase in energy prices and higher tax rates are going to squeeze living standards, and this will reduce consumer spending in many areas. This in turn will tend to reduce employment opportunities, so it is very possible that over the next two or three months the prospects for the UK labour market will appear less rosy than today.”
ENDS
Notes to editors
Contact: Emily Carver, Head of Media, 07715 942 731
IEA spokespeople are available for interview and further comment.
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