Unemployment and economic inactivity continue to drift upwards
14 May 2024
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Housing and Planning
Housing and Planning
Housing and Planning
Commenting on new ONS labour market figures showing an uptick in unemployment and economic inactivity, Len Shackleton, Editorial and Research Fellow at the free market think tank, the Institute of Economic Affairs, said:
“We should not place too much reliance on marginal changes in monthly labour market indicators, particularly with our major source, the Labour Force Survey, still suffering from the problems of low response which are a further fall-out of the Covid malaise.
“However, we can say that last week’s positive news on GDP is not mirrored in the key labour market indicators, which in the latest three-month (January-March) period all seem to have been tipping in the wrong direction, albeit by tiny amounts. Thus total employment is down, as is the employment rate. The unemployment rate is up – at 4.3% it’s higher than pre-pandemic levels – while vacancies are down. The inactivity rate continues its upward drift: this is the long-term challenge which the government has yet to tackle robustly and the opposition seems to imagine that a general election will magically wipe away.
“Of course, changes in these statistics don’t impinge on most people’s lives and only political obsessives worry about them. What concerns most working people is what’s happening to their pay. Here there is some good news. With money earnings rising significantly, and inflation dropping back, annual real pay has increased significantly – by 2% in regular pay, and 1.7% in total pay including bonuses. This may be good news for the government, but the trend will need to continue for several months before it can hope that a feelgood factor will erase the memory of the recent cost of living crisis.”
ENDS
Notes to Editors
Contact: media@iea.org.uk / 07763 365520
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
“We should not place too much reliance on marginal changes in monthly labour market indicators, particularly with our major source, the Labour Force Survey, still suffering from the problems of low response which are a further fall-out of the Covid malaise.
“However, we can say that last week’s positive news on GDP is not mirrored in the key labour market indicators, which in the latest three-month (January-March) period all seem to have been tipping in the wrong direction, albeit by tiny amounts. Thus total employment is down, as is the employment rate. The unemployment rate is up – at 4.3% it’s higher than pre-pandemic levels – while vacancies are down. The inactivity rate continues its upward drift: this is the long-term challenge which the government has yet to tackle robustly and the opposition seems to imagine that a general election will magically wipe away.
“Of course, changes in these statistics don’t impinge on most people’s lives and only political obsessives worry about them. What concerns most working people is what’s happening to their pay. Here there is some good news. With money earnings rising significantly, and inflation dropping back, annual real pay has increased significantly – by 2% in regular pay, and 1.7% in total pay including bonuses. This may be good news for the government, but the trend will need to continue for several months before it can hope that a feelgood factor will erase the memory of the recent cost of living crisis.”
ENDS
Notes to Editors
Contact: media@iea.org.uk / 07763 365520
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
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