From the TUC

What should we make of today’s employment figures?

20 Jul 2016, by in Labour market

Today’s employment figures tell us a story we’ve grown used to – employment is still growing, unemployment is coming down at a slower rate, wage growth is still slow and there are other signs that the labour market isn’t as strong as we’d ideally like. As Damian Green was quick to point out, the 74.4 per cent employment rate is the highest since records began in 1971 and the unemployment rate has gone below the 5 per cent mark (to 4.9 per cent) since 2005.

But there are still reasons to worry. Employment in March to May was 176,000 higher than in December to February, but 119,000 of that increase was self-employment and 59,000 in part-time work, the number of full-time employees only rose by 22,000. That’s better than a fall, of course, and there’s nothing wrong with self-employment and part-time work if that is what workers want, but that isn’t always the case. Citizens Advice estimates that there are 460,000 people in bogus self-employment, usually at the behest of unscrupulous employers and as a result losing £1,200 a year in holiday pay and having to pay an extra £61 a year in NI Contributions (and the loss of employers’ NICs costs the government more than £300 per person). Even where self-employment isn’t bogus, the Social Market Foundation reckons that 49 per cent of self-employed workers are low-paid on and hourly basis, compared with 22 [per cent of employees; 1.73 million workers who would qualify for the National Living Wage do not because they are self-employed.

Part-time work is dominated by women, who will often choose it because it is a better fit with their family life, but part-time employment often attracts much lower pay – women working part-time earn 33 per cent less per hour than men (based on mean hourly earnings excluding overtime) and TUC research has found that in some parts of the country over three quarters of women workers earn less than the living wage.

So the fact that, since the recession, a disproportionate number of the new jobs have been part-time or in self-employment is very worrying. In the chart below, looking at the change from one quarter to the next since the 2010 election, you can see that, in 2014 we finally saw full-time employee jobs dominating the recovery, but in recent months that has dropped off and part-time and self-employment have been the engine e of growth:


(Thanks to Geoff for this chart.) And earnings are still not rising quickly enough. Calculated on a regular pay basis, earnings grew 2.2 per cent over the past year, or if we look at the “real pay” measure that translates earnings into 2000 terms by 1.8 per cent, leaving us as far from the level achieved just before the recession as we were last month:


All in all, I’d rather have these figures than those we saw when George Osborne nearly engineered a double-dip recession, but it still isn’t a firm foundation for the difficult times ahead.