Wednesday 14 December 2016

UK Unemployment at new unsustainabe low

So on the one hand, with UK unemployment dropping to 4.8% #despitebrexit, there is yet more amusing grist to our collective mill of laughing wildly at the idiotic remoaners who are spending so much time saying how stupid Liam Fox et al are; whilst being simultaneously wrong about every forecast and every prediction they have made for, er, well it starts to feel like forever...

For no real reason, here are the current unemployment rates across the EU:

Greece: 23%
Spain: 19%
Italy: 11.6%
France: 9.7%
EU: 8.3%
Germany: 4.1%

As we can see, the UK is the pure outlier here, only marginally behind Germany in the creating jobs stakes. A real basket case, though the basket in question may be more like a Harrods hamper.

There is a big however though, due to the nature of the modern economy, any unemployment rate under 5% is probably not that sustainable. It does suggest that there is strong pressure on labour.

Interestingly in the UK, we have still not seen that much upwards wage pressure, there maybe lots of reasons for this - such as illegal immigration is much higher than registered thus the jobless rate looks artificially low compared to people who really are competing for jobs.

Or the quality of jobs created is very low and thus even some wage pressure makes little difference to the overall numbers  (as compared to say, when Bankers were getting 5% pay rises on seven figure incomes in 2006, 20p an hour extra to your sprouts pickers is not so impactful at a macro level).

We need to know the answers to this as it will mean the future Government will have to consider how much immigration to allow  - undoubtedly on prima facie evidence it would appear from an economic standpoint that reducing immigration will reduce the growth capacity of the UK at this point. Of course, there is more to it than this and creating low wage jobs in the UK for people from Latvia is not really an economic model to be envied.


Electro-Kevin said...

Not forgetting useless degree courses, NEETs and 'pensioned' long term unemployed who should not be classed as pensioners if they've never worked and never paid stamp.

CityUnslicker said...

Indeed EK, most Western governments have been content to let the workforce 'shrink' by allowing lots of people off the hook simply because they don't claim JSA. It means measuring out potential is very hard when you add them in with the illegals/no NI numbers too.

Anonymous said...

On a similar note I was speaking to a friend last night who lost his (minimum wage) job on Thursday morning last week.

He went straight to job seekers, who told him they may have something with an agency.

Friday morning he went to for an induction for a basic picking/packing job, he was there with 23 other people that had been sent by job seekers.

After induction he was the only one that stayed to actually do the job - the rest had done enough to show they'd looked for job, so they can continue to get their job seekers allowance.

Jan said...

I wonder how many of the 4.8% unemployed are people who worked hard and then cashed in their housing chips (especially if they lived in London)and have retired to a cheaper part of the country. They may be well under retirement age but are sick of the rat-race.

Steven_L said...

I wonder how many of the 4.8% unemployed are people who worked hard and then cashed in their housing chips

There always used to be a maximum amount of savings you were allowed if you were claiming JSA - £8k in 2006 from what I remember - I'd presume this is still the case? And that the 4.8% is JSA claimants (not non-job seekers like single parents with small children, people who can't work due to disability etc)?

Laban Tall said...

"we have still not seen that much upwards wage pressure, there maybe lots of reasons for this"

Er - record levels of EU immigration? It's the floor wage that sets the standard for all the rest (if it were the highest wages setting the general standards the last 30 years would have seen record rises in real wages).

"Record numbers of EU migrants came to Britain last year as more Romanians came to Britain than those from any other nation for the first time. The Office for National Statistics said an unprecedented 284,000 EU citizens arrived in the UK in the year to June, which covers a period up to and just after the referendum. The inflow of EU citizens has hit a historic high, while long-term migration to the UK has remained around record levels at a third of a million."

Remember that real median male earnings in the UK are still below their 1997 levels. That's nearly 20 years of stasis/decline, while the real cost of housing has soared.

Good news for the top five percent, who can afford to turn entire Cornish and Welsh seaside villages into ghost towns for nine months of the year.

CityUnslicker said...

Jan - as SL said, they wont be on JSA so are magically not in the numbers.

Electro-Kevin said...

Laban Tall - Yet where wages are decent we expect bright boys from Cracow to come and undercut them.

andrew said...

The govt definition of 'unemployed' has changed a lot over the years.
It may say x%, but if you moved the the definition used in 1978 (say), I have the feeling it would be a lot higher.

The EU uses the ILO defn of unemployment and yes, we are just above Germany and the Czech republic on that count.

However looking at the underemployment stats,
UK 5.5
Germany 3.9
Czech rep 0.5

so good but could do better in quality and quantity.

Blue Eyes said...

It's a game of definitions and statistics... but it is pretty clear that the UK economy is generating jobs much better than much of Europe.

Steven_L said...

Perhaps we should invite some of them to join the United Kingdom?

Scrobs. said...

It must be proper good news, as the BBC didn't mention it until the last few strangled minutes of last night's extravaganza - The Six o'clock slot.

Blue Eyes said...

The record of that is not good. All they would do is whinge, spend our money and try to make us into socialists. They wouldn't even learn the language properly!