Recent labour market data much better than could have been expected
Some media coverage of today’s statistics suggests that unemployment is now rising sharply again. While future redundancies remain likely, and the ILO measure (which has fallen for 4 out of the 5 previous months) may well increase into 2010, the reality is that despite seeing record GDP falls, the labour market impacts of the recession have been nowhere near as bad as previous downturns.
The claimant count increase between December and January is concerning, as is the continued fall in full-time employment (albeit at a slower rate than we’ve seen in previous months) and the ongoing rise in levels of involuntary part-time and temporary work. On the other hand, vacancies are up significantly (49,000), youth unemployment continues to fall (13,000), redundancies are also going down (36,000) and in-flows to JSA have reduced for the 4th consecutive month (suggesting that the increased claimant count is a result of fewer people moving off JSA between Dec 09-Jan 10, rather than a large increase in redundancy rates).
The labour market is far from healthy. But it is performing both far better than could have been anticipated at the start of the recession – and Government investment (for example in the Future Jobs Fund, in front-line Jobcentre staff, in the Rapid Response Service, the 16-17 year olds and Young People’s Guarantees) is a key part of the explanation.