Autumn this year saw a steep drop in unemployment levels, as the private sector started to absorb some of the public sector’s job cuts by providing a wealth of roles. Up to 86,000 jobseekers found positions between August and October, and 3,000 people stopped claiming jobseeker’s allowance, despite the fact that the economy has failed to maintain a steady rate of growth.
Less encouragingly however, figures from the Office of National Statistics indicate that while earnings are rising at an annual rate of 1.7%, this does not reflect the inflation rate of 2.7%, leading the Bank of England’s chief economist Spencer Dale to comment that people with jobs today are actually much worse off now than they were five years ago, before the global financial crisis.
According to Dale, the United Kingdom is still in a state of adjustment and is continually adapting to the post-2008 financial climate. He pointed to the drop in productivity as an indicator, which has seen employment levels on the up, but no real rise in output.
“The harsh but inescapable reality of these developments – and the real adjustments they necessitate – is that households and families in our economy are worse off. Much worse off,” he stated in London, where he applauded the British labour market’s “extraordinary flexibility” but commented that the average worker brings home 15% less than they did pre-2008.
“No wonder people are finding life tough… One of the most striking – and indeed encouraging – features of the performance of our economy since the financial crisis are the falls in real wages that have been achieved without a very sharp rise in unemployment. Unemployment has indeed risen, but by far less than would have been the case had the labour market displayed the resistance and rigidities of the past.”
Youth unemployment in particular has shown encouraging signs of decline, and is currently at its lowest level in over three years. Employment minister Mark Hoban is keen to reassure people that, “we’re not complacent and know there are still lots of challenges ahead, which is why the Government will continue working hard to help those people who want to get on in life and allow the UK to compete in the global race.” The chairman of the Federation of Small Businesses, John Walker, also weighed in: “It is good news that the labour market is inching in the right direction and that youth unemployment is falling. However, latest forecasts from the Office for Budget Responsibility suggest that unemployment will peak at 8.2% which may mean further job losses in the medium term.”
Simply put, the race is not over, and while the job market is definitely moving in the right direction, competition for roles is still fierce – especially in the banking industry.
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December 19th 2012