From the TUC

Are the improvements in the labour market recovery being overstated?

19 Jan 2015, by in Labour market

Employment levels may be rising to record levels; however, this is partly a result of the rising numbers in the working population. The employment rate at 73.0 per cent only recently returned to its pre-crisis peak; whereas the 6.0 per cent unemployment rate, while falling, is still above the pre- crisis rate of 5.2 per cent, amounting to around 300,000 more unemployed people.

However, in order to make a more honest assessment of the state of the UK’s jobs market this requires far wider measures of labour market weakness to be taken into account than simply the headline employment/unemployment rate.

We have widely commented on the seven years of falling real earnings. In recent months earnings growth is up a little and signs of a real earnings rise are now appearing, but this is more due to low inflation figures than healthy pay increases. It will still take years to recover the real value of people’s earnings.

Our previous analysis on the changing labour market composition also showed that, while full-time employment is now rising healthily, the share of UK jobs accounted for by full-time employee jobs (many people’s first choice) remains at below pre-recession levels; there is a shortfall of over 600,000 full-time employee jobs. 

Any recent gains in the labour market must also be set against large-scale under-employment. Our analysis released today on under-employment shows there were 2.3 million people under-employed in late 2007 and under-employment increased rapidly following the recession to reach 3.2 million in late 2010. Between 2010 and late 2013 under-employment had increased even further to nearly 3.4 million.

This TUC analysis takes a comprehensive look at the true scale of under-employment by looking at how many workers across the economy want more hours in their existing jobs as well considering the regularly published measure of the number of workers in part-time jobs who want to work full-time.

Since late 2013, under-employment has been slowly falling and by late 2014 had reduced by 110,000 people to just over 3.2 million.

Under-employment levels 2007-2014

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Our analysis also found that that if under-employment continues to fall at the same rate as between 2013 and 2014, it will not return to the pre-crisis level of 2.3 million people until early 2023.

The UK needs a much lower rate of under-employment. Otherwise levels of in-work poverty will remain high and the economy will be failing to achieve its full potential. The jobs recovery will only be fully underway when under-employment levels start to show significant falls.    

UK under-employment levels (includes employees and self-employed)

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