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Falling unemployment? If only it were that simple Falling unemployment? If only it were that simple
(2 months later)
Before we get carried away with a 57,000 fall in unemployment since last December, there should be some recognition that many people have not found a job but have simply withdrawn from the labour market.Before we get carried away with a 57,000 fall in unemployment since last December, there should be some recognition that many people have not found a job but have simply withdrawn from the labour market.
The number of economically inactive people, those classified as not looking for work, increased by 87,000 in the three months to June to reach 9 million, according to the Office for National Statistics (ONS).The number of economically inactive people, those classified as not looking for work, increased by 87,000 in the three months to June to reach 9 million, according to the Office for National Statistics (ONS).
The picture is similar in the US, where steep falls in unemployment last year were accompanied by a growing number of people who were not looking for work.The picture is similar in the US, where steep falls in unemployment last year were accompanied by a growing number of people who were not looking for work.
Another worry is the statistic showing long-term unemployment has reached a 17-year high. The ONS said the number of people who have been out of work for more than a year increased by 32,000 to reach 915,000.Another worry is the statistic showing long-term unemployment has reached a 17-year high. The ONS said the number of people who have been out of work for more than a year increased by 32,000 to reach 915,000.
Long-term unemployment means a loss of up-to-date skills. The same problem can arise when people withdraw from the labour market. Economists worry that sustained long-term unemployment turns a cyclical downturn into a structural problem.Long-term unemployment means a loss of up-to-date skills. The same problem can arise when people withdraw from the labour market. Economists worry that sustained long-term unemployment turns a cyclical downturn into a structural problem.
Then there is the continuing wage problem, with average weekly earnings 1% higher than the same time last year. During the same period, the consumer price index was running at 2.9%.Then there is the continuing wage problem, with average weekly earnings 1% higher than the same time last year. During the same period, the consumer price index was running at 2.9%.
The Bank of England assures us that inflation is returning to its 2% target over the next couple of years. But employers are offering no assurance that wages are going to jump above that level. In Germany, wages are beginning to streak ahead of inflation. Maybe if British managements could find a way to boost exports and spur economic growth, British workers could command an inflation-busting rise. Until that day comes, the underlying picture is not as great as the headline unemployment fall suggests.The Bank of England assures us that inflation is returning to its 2% target over the next couple of years. But employers are offering no assurance that wages are going to jump above that level. In Germany, wages are beginning to streak ahead of inflation. Maybe if British managements could find a way to boost exports and spur economic growth, British workers could command an inflation-busting rise. Until that day comes, the underlying picture is not as great as the headline unemployment fall suggests.
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