No more jobs without growth: now we have neither
Last November the Chancellor reported that:
private sector job creation would “far outweigh” the job losses in the public sector.
And earlier this year a superficial look at the labour market figures suggested that he could be right: unemployment fell by 80,000 and economists attempted to understand how zero growth could possibly have led to net job creation.
As the months went on the government became ever more optimistic of success, and in April 2011 DWP Minister Chris Grayling welcomed rising private sector employment and a fall in the overall number of people unemployed as a “step in the right direction”.
We have always been concerned that these claims were overstated, with rising levels of part-time work (particularly part-time self-employment) and persistently high unemployment demonstrating that all was not well. But today’s figures show just how far from a labour market recovery we really are.
In the second quarter of 2011 the public sector lost 111,000 jobs while employment in the private sector only increased by 41,000. There are now 2,510,000 adults in the UK desperately seeking work.
The ‘jobless growth’ phenomenon was always caveatted by concerns about underlying labour market weakness. As Nigel Meager pointed out on this blog in June falls in working time (with a growth in people seeking more hours of work than they could find) and a reduced number of vacancies always suggested an economy suffering from “chronic demand-deficiency”. And today we have learnt that falling demand is now also affecting employment numbers. Unemployment overall is up 80,000 on the quarter (39,000 for men and 41,000 for women); youth unemployment (18-24 year olds) is at its highest level since Spring 1993; employment is down 69,000 and there has been a 70,000 rise in the numbers of people working part-time because they can’t find full time work.
The OBR forecast that 330,000 public sector jobs would be lost between 2011 and 2015, but a third of that total have already been lost in three months. There are now 5.6 jobseekers nationally for every jobs, and the picture looks set to get worse. Growth in Q2 was only 0.2%, and recent data do not suggest significant Q3 improvements. With the global economy slowing, the trade deficit stagnant, earnings still dragging behind rising inflation (dampening consumer spending) and the Government resolving to stick to its course of the sharpest spending cuts in decades it is far from clear where growth is going to come from – a double dip is no longer just an outside risk. In the mean time, the human price is rising and the future social and economic costs of further inaction will be high. Plan B is becoming a necessity, not a choice.