The mystery of rising employment

Woman walks past a Job Centre

How can employment appear to be going up and unemployment down when the economy is so flat?

Always one to revel in a statistical mystery, I have dived into today's employment data to see if I can solve the riddle.

The first thing to point out is that the ONS headline on joblessness compares the three months to May with the previous quarter. This shows the number unemployed fell by 65,000. However, employment is highly seasonal, so a far better comparison is with the same period last year. This shows an increase in unemployment of 132,000.

But at first sight, the figures on employment do appear to be more encouraging than one might have expected - an increase of 181,000 on the quarter and, more modestly, an increase of 75,000 year-on-year.

This appears slightly odd since we know how economic growth has basically flat-lined over the last year. Buried within the tables, however, there are some clues as to why this might be.

If one looks at full-time workers one notices an odd thing. Overall, the number of full-time workers has gone up 47,000. Good news.

But the number of employees working full-time has fallen 120,000 and the number of self-employed people working full time has risen by 132,000.

Imagine the scenario: a plumber working for a company is made redundant so decides to set up on his own. As an employee he got paid for every hour he was available for work. As a self-employed person he only gets paid for jobs that he does.

He might describe himself as a full-time self-employed person but a lot of that time may be spent waiting for the phone to ring. His full-time status has not changed but his earnings might well have done.

It is worth pointing out that it is men who are moving out of full-time employment - 161,000 fewer than a year before. Among women the figure has gone up 42,000.

There is also some interesting detail on people who work part time. Among men there has been a significant increase in part-time working, up 3.7%. Among women, however, the proportion has fallen 0.7%. Because more than twice as many women work part time as men, this results in an overall increase in part-time working of just 0.4%.

It is, though, the 4.2% increase in self-employment and 0.6% fall in employment that strikes me as critical in understanding the data. This could be seen as a story of resilience - British workers resolutely refusing to be pushed onto the dole decide to try and make a living on their own.

Only last week I wrote about the youth worker Karen Creed made redundant by Norfolk County Council and now operating as a freelance. Her income has been cut to a third of what it was but she is undoubtedly a full-time self-employed worker.

On the other hand, the employment figures may be lulling us into a false sense of security. We need to know more about what these "full-time self-employed" people are actually doing. It is a worry if a lot of their time is spent waiting for the phone to ring.

Mark Easton Article written by Mark Easton Mark Easton Home editor

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  • rate this

    Comment number 70.

    Too many people are being forced off sickness benefits and are not then able to claim any means tested benefits. They are then not included in any figures.

    As the annoying little tele rat says "simples"

  • rate this

    Comment number 69.

    People who are "instructed" to attend training courses are NOT on the "Counted as unemployed" list as they are "in training"

    A big joke as most of the so called training courses are nothing of the sort.
    One provider attempted to teach my Son how to use the internet and send Email, despite the fact he Graduated from Hull University with a 2:1 in Computer Science.

  • rate this

    Comment number 68.

    The roots of the difficulty is that the whole concept is based on an arbitrary idea of a proper job being 40 hrs a week by a man going to work and anything less is inferior. In reality a surgeon may work 1 day a week but probably earns more than most full timers.

    From an official point of view all that should matter is if people are self supporting or need/deserve help.

  • rate this

    Comment number 67.

    #55. Tim in Singapore
    #59. Tom Adustus

    The arrogance of those like yourselves who transpose your own experience as part of a technical elite onto everyone else is breathtaking.

    Highly predictable though.

    Perhaps your views will alter if you fail to stay ahead of the competition. Rightwards probably.

    BTW What IS the Tax regime like in Singapore :)

  • rate this

    Comment number 66.

    #63. inacasino

    Yes..we know, the Poles work harder for less than the lazy English.

    Are you on the side of the Employer of cheap labour or on the side of people trying to protect their standard of living?

    If we gave up all our public services and majority lived in shanty towns labour would be cheap and people work harder to survive.

    Is that what we want? It is the only way...says Capital

  • rate this

    Comment number 65.

    #59. Tom Adustus

    Well good for you.

    However, we can't ALL be over-paid 'Consultants' can we(?)

    In IT the increasing tendancy for companies to out-source means that more people are employed on short-term contracts doing 'consultancy' while software development and support gets done remotely in the Far East.

    Maybe this is Thatchers dream of a service economy... unsustainable though.

  • rate this

    Comment number 64.

    There is a great deal of political hype over employment statistics. I have been, variously, full-time, part-time and self employed since 1965, been made redundant three times and am looking forward to not retiring. I find it astonishing that we allow people who are non-resident to take up positions across the UK and this isn't being xenophobic or discriminatory.

  • rate this

    Comment number 63.

    58. ronnieboy1
    "how many people unemployed are not british? why are these people here ?I lost my job in april I havnt bothered to sign on.The whole system is a joke ,i could apply for a job but wont succeed because i dont speak polish. ."

    Perhaps people find the Poles are thorough and conscientious when they perform a task?

  • rate this

    Comment number 62.

    The wrong unemployment rates of Germany reported by the BBC are a mystery to me:
    In June 2012 there were 46.000 less unemployed in Germany, the rate has fallen for -0,1% to 6,6%

    The BBC wrongyl reported "German unemployment has risen" in June 2012 with an unchanged rate!!!

  • rate this

    Comment number 61.

    Self employment ..

    Eg -

    Guy with good, full time job gets made redundant from running youth club and replaced by someone doing it as a hobby. He sets up his own small gardening business and registers with HMRC as 'self employed' (legal requirement).

    He may or may not be getting any significant amount of trade and his family may be living in poverty - but he is not classed as 'unemployed'

  • rate this

    Comment number 60.

    I had to laugh at the idea of a plumber sitting waiting for the phone to ring. Mark, have you ever tried to get hold of a plumber? Either they never answer the phone or a child answers who promises that Dad will call back when he comes in. Dad never does.

  • rate this

    Comment number 59.

    The move to self employment is to be welcomed. People working for themselves work harder and have greater satisfaction from their work. I became a freelance IT worker 20 years ago and have never looked back.

  • rate this

    Comment number 58.

    how many people unemployed are not british? why are these people here ?I lost my job in april I havnt bothered to sign on.The whole system is a joke ,i could apply for a job but wont succeed because i dont speak polish. .

  • rate this

    Comment number 57.

    "Forget the politics"

    LOL! (Laughs Out Loud, Dave)

    Too many of us do forget the politics. That's why we are saddled with self-seeking, con men masquerading as politicians, servants of the corporations but masters of the ordinary people they govern.

    Yes, they'd love us to forget the politics!

  • rate this

    Comment number 56.

    54 Whether it is for political reasons 48 thinks that, factually and statistically it is still also the only valid basis for comparison unless the figures are adjusted for seasonality.
    You are however also correct that any improvement in the numbers however slight is to be welcomed, if only that it means fewer fellow travellers are consigned to unemloyment and benefits. Forget the politics.

  • rate this

    Comment number 55.

    "We need to know more about what these "full-time self-employed" people are actually doing. It is a worry if a lot of their time is spent waiting for the phone to ring."

    Mark - that's the essence of freelance work, esp. at the outset. Good that people are setting up on their own; naive to expect an immediate stream of work. Freelancing builds up over time, based on a tally of satisfied customers.

  • rate this

    Comment number 54.

    Spike 48.

    What you mean is that a comparison with last year only matters because that fits your view of this government. If you want another fact, with every Labour government in history unemployment has always been higher when they left office than when they came in. Fact.

    The figures while mildly encouraging are too short term to decide if it is a trend or a blip. Time will tell.

  • rate this

    Comment number 53.

    Part of the problem with the recovery is the media's obsession with putting any bad spin they can come up with on any glimmer of good news.
    If they got their miserable heads out of their half empty glasses confidence might return sooner.

  • rate this

    Comment number 52.

    Part of the trouble seems to be the variable and often misused term "employed" & using 16+ hours as an indicator suits the Cons just fine. I'm not so sure the redundant plumber waiting for the phone to ring would consider himself "employed" ~ still, he fits the box so lets tick him off eh? Tax credits or no tax credits ~ in common sense terms & blinkers off! unemployment is most definitely up!

  • rate this

    Comment number 51.

    47 The number on this scheme over the quarter increased by 42000.


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