Friday 10 November 2017

UK unempoyment: a record low?

It's natural that those who want to boost our image as "global Britain" make much of any positive information about the performance of our economy.  Eighteen months or so ago much was made of the statistic that we were " the fastest growing economy in the G7."  Now, since the referendum result, we've slipped to the slowest among the G7, we no longer hear  much about that.

However, last week there was "good" news: our current level of unemployment, at 4.3% is the lowest since the days of Harold Wilson, and now among the lowest of the major economies of Europe - less half that of that of France, for example.

Those of us in the  economics education business learned to distrust government unemployment statistics way back in the 80s. That 4.3% is based on what is known as the "claimant count"  - the number of people "signing on" for unemployment benefit.  Mrs Thatcher's government made over 30 adjustments to the way the claimant count was calculated, almost all of them leading to a lower total.  Basically, if there is no entitlement to a benefit, many those who are unemployed don't bother to "sign on" at the Labour  Exchanges created by Winston Churchill when he was a member of  the Liberal government in the noughties of the last century and now called Job Centres, as these places are no longer  all that helpful in finding people jobs.

Rather, economists now focus on the International Labour Organisation's (ILO) broader measure of unemployment.  Independent research  by Sheffield   Hallam University, summarised here, claims that  that 735 000 people would need to be added to the claimant count to match the ILO measure.That's almost as many as the 785 000 on the claimant count, so  just about doubles the percentage figure to bring it roughly equal to that of France.

But that's not the end of the story.  There's another 750 000 people who have been shunted  off on to Incapacity Benefits who would really like a job but can't get one.  Many still look vigorously, but many have given up hope, I suspect because, once employers see a gap in someone's employment history they are reluctant to offer a job if there are other candidates with a continuous employment records.  Most people these days these days are careful to  disguise any gaps in their CVs.

The Sheffield Hallam researchers refer to this factor  as "hidden unemployment."  Whether in this they also include  the vast number, particularly women, who are in part-time jobs but who would really like full-time jobs, those on short-term contracts who would like longer-term security, those with routine jobs which make no demands on their qualification and capabilities, and those at the bottom of the pile on "zero-hours" contracts, I don't know.

What I do know is that the state of the jobs market is a far cry from the healthy days of my early teaching career, when we regarded 3% as the normally tolerable rate of unemployment.  Even today's claimant count is nearly 50% higher than this.

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