Unemployment falls and wages rise, but skills shortages hurt low earners

Wed, 17/06/2015 - 12:48 -- nick

The latest unemployment figures show a rapid slowdown in recent falls, down only 43,000 in the last three months.

Between February and April 2015 the number out of work fell to 1.81 million, but the era of quarterly drops of more than 100,000 is well and truly over.

There was better news in the growth in employment - 114,000 more people were in work - but most of this came from the growth in population, including immigration, rather than from the ranks of the unemployed, and this too was lower than recent figures.

This suggests partly that those out of work do not always have the skills the modern job market needs, and more training funding needs to be provided by the new government to help them into new industries and roles. Jobcentres are focused on getting the workless off the benefit register as quickly as possible, and will rarely allow them to take time to get longer-term training even where this is highly likely to lead to sustained work, hurting their ability to get the kind of jobs which allow a decent standard of living and help them contribute to the economy in the long term.

The fight for skilled staff explains why wages have begun rising more rapidly - up 2.7% in the last year - but also suggests a two-speed jobs market, with those who have sought-after experience able to command higher pay while those operating at the unskilled level, where many unemployed people are trying to enter, still struggle at or around the minimum wage.

We can expect this twin-track market to continue, and entry level wages are likely to stay static for a long time.

While there has been a good recovery in full-time jobs, some people are still not getting as many hours as they want, and there are still 4.5 million self-employed people, many of whom are not working as much as they need to, although there was a fall in their number in the last quarter after some recent rises.

More than half of the new jobs created in the last year went to non-UK nationals, but they have contributed to growth in this country.

There are still problems with including Universal Credit claimants in the count of those out of work. It was anticipated that having one payment system for those on a low income (whether they were in jobs or not) would make recording them as unemployed more difficult. This has proven to be the case, and is becoming an increasing problem with more than 50,000 people now registered on the scheme.

Both long-term and youth unemployment are falling, and these figures have been stubborn in the past, but the number of economically inactive people - those out of the jobs market because they are students, sick, looking after their homes or taking a break from work - has risen over the last year.

The jobs market is recovering, but there are still problems for those trying to break into it and work at the bottom of it.