The latest unemployment figures are fantastic with the number in the UK without work down to the lowest level for 43 years – despite Brexit.
Remember the Project Fear prognosis? That growth would be savaged by more than 3.6 per cent and unemployment would soar by nearly 1m?
Whichever way you voted on Brexit, the Treasury’s apocalyptic scare tactics were not only horribly wrong but backfired miserably. The gap between the Treasury’s forecasts for two years after the vote and the actual out-turn is remarkable. In June 2016, the unemployment rate was 4.9 per cent, and the number in work 31.7m.
Employment: The number in the UK without work is down to the lowest level for 43 years
Today’s jobs numbers show that the unemployment rate is down to 4 per cent in the last quarter to June, and there are 32.4m in work.
More importantly the numbers show interesting and positive trends.
There has been a big increase in men and women finding full-time work, while youth unemployment is at its lowest since records began in 1992. It’s still too high at 11.3 per cent but is moving in the right direction. Those working on the dreaded zero-contract hours is sharply down too.
One of the reasons for the improvement was the net outflow of EU citizens working in the UK – the number in the period was down by 86,000, the biggest fall in 21 years. Yet overall the number of EU nationals working here is still higher than after the referendum. Balancing out those numbers were a rise in non-EU nationals working in the UK, up by 74,000 to 1.27m.
Of concern is the rise in those aged between 16 and 64 who are ‘economically inactive’, those who don’t seek work either because of disability or inclination. This is distressing, particularly as so many of the inactive are based in the poorer north. And there must be more that can be done to coax and retrain them back into work.
Productivity has also bounced back, with output per hour worked up by 1.5 per cent, the biggest rise since late 2016. But therein lies a puzzle. Typically when unemployment falls and you have a super-tight labour market, wages start to motor. They are not. They have been flat-lining for a decade. Even the economists don’t know why.
Pay rises over the year to June, excluding bonuses, averaged 2.7 per cent – higher than inflation at 2.4 per cent but the weakest for a year.
This increase is not as high as you would expect in such competitive conditions – and certainly not enough to show in living standards. It doesn’t even keep pace with the 3.4 per cent rise in the Retail Prices Index used – wrongly in my view – to calculate rises in rail fares and other prices.
Why then are wages so stubbornly stagnant? There are at least three reasons. First, UK productivity is the lowest of all developed nations. It’s something of a curate’s egg: while we have many hi-tech frontier companies which are at the forefront of innovation and highly productive, we also have too many companies which are in the dark ages when it comes to investment and innovation.
There is still a reluctance by too many corporates to invest in new skills and machinery. That needs to change.
Second, the bargaining power of the trade unions has collapsed since the 1980s. Membership has halved to 6m, and most members are in the public sector. Unions have all but disappeared from private industry, ironically at a time of greater job insecurity and a huge leap in the number of self-employed.
Finally, the fear factor. Workers have been loath to bargain with their bosses for higher salaries because of the fear of losing their jobs since the financial crash. Time for that to change. You have nothing to lose but your chains.
Tim Martin of Wetherspoons is reviewing all the products he sells from EU countries
Made in Britain
Tim Martin of Wetherspoons is reviewing all the products he sells from EU countries to find alternatives in Britain or elsewhere in the world.
Instead of German beers or Italian coffee in his pub chain, Martin wants more British beers or African coffee. This is his revenge against the EU, which he accuses of putting Brits in the ‘firing line’.
Always a bolshy Brexiteer, he suggests all UK retailers and supermarkets should take the same approach.
Will Trump-style protectionism spread? Who knows, but it could help out with the UK’s productivity puzzle.