Further falls in unemployment but wage and claimant numbers disappoint

Wed, 17/02/2016 - 14:01 -- nick

The last three months of 2015 saw most recent employment trends continue, with 205,000 more people in work and a rate of 74.1%, the highest since records began in 1971.

Unemployment was also down by 60,000 compared with July-September, standing at 1.69 million but with an unchanged rate of 5.1% compared to a month ago.

These falls have begun to slow, suggesting a mismatch between the jobs available and the skills unemployed people have, as well as a patchy recovery where some regions and towns do not see the same opportunities as others.

The North East still has the highest unemployment rate, at 8.1%, while the South West sees the lowest at 3.7%.

Given rapid population growth in the UK the number in work needs to rise constantly for unemployment not to go up, and problems in the world economy suggest this could be threatened over the next few months. This is the reason why the trumpeting of endless rises in the number in work should be taken with a pinch of salt, particularly when they make only a limited impact on worklessness.

When the same age groups are compared, while unemployment fell by 53,000 in the three month period, the number claiming benefits fell by only 6,000, a huge gap which suggests that those who do not need to claim JSA - typically wealthier and higher skilled - are finding it easier to re-enter the jobs market.

A small fall in the number of economically inactive people shows partly that the government's focus on bringing people into the jobs market from disability or sickness benefits has been - predictably - more difficult than they thought. The vast majority claim because they need to due to very significant barriers, and no amount of assessment will change that.

Last year's big wage increases pushed 3%, but the latest figures showed disappointment for those hoping pay would pull them out of poverty with 1.9% average rises.

The Office for National Statistics called pay growth "subdued" in recognition of this, and confessed that the most recent level for December alone was even lower at 1.5%.

Low unemployment without strong pay growth suggests problems in the labour market, including work being created mainly at unskilled or lower skilled levels.

It could also be a reflection of the lowest number of public sector jobs on record, as these jobs are usually higher skilled and better paid than average.

With an EU vote to be held soon, trouble coming from China and stock market turmoil, more problems may lie ahead.