No labour market miracle, but no doomsday yet
Today's labour market figures were not far off expectations, but that may show how low expectations have become. Last spring, we were all marvelling at how quickly unemployment had started to come down.
With several months of flat or rising unemployment, it is fair to say that the excitement has now worn off. But total unemployment, at around 2.5m, is still lower than many expected in 2009. A 6% decline in national output had most economists expecting a similar-sized fall in employment; the actual fall over the course of the recession was closer to 2%, in large part because workers have proved so willing to take cuts in pay and hours, either in their existing job or a new one.
I've said all this plenty of times in this blog. I thought it worth repeating today, because the mood around the labour market has swung from surprised optimism, to deepest gloom. True, anyone who announced a jobs market miracle on the back of last year's falls in unemployment has been disappointed. (In truth, most were a lot more cautious than that.) But that doesn't make the doomsday scenarios any more correct.
For all the ups and downs, I'm struck that the unemployment rate in the three months to November was 7.9%. In the same period in 2009 it was 7.8%. That is to say, we are more or less back where we were in the last months of the recession, when most were still expecting the jobless total to continue to rise.
That said, there are three developments under the surface that are worth mentioning - one somewhat encouraging, the others definitely not.
The encouraging fact is that overall employment in the UK has risen by 184,000. The data on private and public sector employment is less timely, but in the year to September 2010, employment in the private sector grew by 184,000, or 0.6%. For part of that year, Britain was still in recession.
Over the same period, public sector employment fell by 77,000. So, last year, at least, the private sector is likely to have created more than enough jobs to offset losses in the public sector.
That doesn't tell us anything about the future, of course. And we do know there were more public-sector job losses in the last months of 2010. But bearing in mind that this was only the first year of recovery, and the OBR is forecasting a total loss of employment in the public sector of 330,000 over four years, it's not too dispiriting.
More worrying - though perhaps not surprising - is the rise in the number of young people unemployed, and the creep upwards in long-term unemployment.
Of the record 951,000 of 16 to 24-year-olds out of work, around 270,000 are in full-time education (but looking for part-time work). That has sometimes distorted the "headline" changes. But not this time. The rise in unemployment among this group in the three months to November was due to falling numbers in employment or education - and a big rise in the number not in work and not in school. Not many silver linings there.
The rise in long-term joblessness is also striking: during the recession, labour market experts at the Department for Work and Pensions were surprised and pleased to see that the "exit" rate out of unemployment had held up, even as the number losing their jobs was going up. It's difficult to tell for sure, on the basis of the published numbers, but the rise in long-term unemployment suggests that this is less true today. Or at least, there is a growing "hard core" of people who are not finding work.
One-third of people on the unemployment rolls have now been there for over a year. The share was a third when the recession began. As John Hawksworth, chief economist at PwC points out in the chart below, this is still far below the peak of 45%, reached in the early 1990s. But it is worrying all the same. No jobs market miracle there, either.