Unemployment continues to fall
UK unemployment fell in the three
months to December, while the number of people in work jumped to a new
record.
The jobless total fell by 14,000 between October and December to 2.5 million according to the Office for National Statistics (ONS).
The number in work rose by 154,000 to 29.7 million. More than 580,000 more people are employed than a year ago.
The number of people claiming Jobseeker's Allowance in January fell by 12,500 to 1.54 million.
Overall, the ONS said there were 29.73 million people in the UK in employment, of which 73% were working full-time and 27% were working part-time.
In the three months to December, the unemployment rate fell to 7.8% - down from 7.9% in the previous quarter. Work and Pensions Secretary Iain Duncan Smith told the BBC "No-one is saying this is easy, but if you were in France or Spain or Greece... you would look at these figures and say I wish we were in that position." The number of long-term unemployed also fell to 879,000, with 15,000 fewer people that had been unemployed for more than one year.
The good news for the Labour market as a whole did not apply in the cast of Youth unemployment, for which there was a disappointing rise. The divergence between unemployment figures and growth is surprising and the Office for National Statistics has been checking the figures to see if they could be wrong. This is sometimes referred to as the productivity puzzle.
The ONS has published its latest analysis to try to resolve this productivity puzzle, which does not appear to support the conclusion that it is simply a matter of wrong figures.
The paradox of low growth combined with better employment figures than you would expect given the output position applies to other European countries as well as Britain. The ONS research concludes that there is no single factor that provides an explanation, but identifies several that may have contributed.
The financial crisis itself is probably the cause of at least some of the drop in productivity. Productivity in financial services and insurance was rising before the crisis at an annual 4.1%. Since 2009 it has fallen.
More information on the productivity puzzle is given on the BBC website here.
In the short term the fact that employment is rising may have averted a triple-dip to the recession and contribute to a faster recovery than might otherwise have been the case. But the combination of low growth and rising employment represents a drop in productivity, and in the longer term we need to get productivity rising again if Britain is to have a healthy economy.
Comments
Ok, take a look at the Employed figure. Now ask How many are Employed in the productive private sector?, then ask how many are employed in the none productive public sector?
The figures will move much further into balance when we do this.
While I would not accept that public sector employment is necessarily a bad thing - we need teachers, doctors, and policemen - I would entirely agree with you that we need more wealth creating private sector jobs to pay for them and that the present balance is unsustainable and unaffordable.
Also well done and give yourself a golden star. You just done something the top "economists" (or should I say Keynesian culties) could not. That is you just solved the "productivity puzzle"