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IEA labour market expert comments on ONS labour market report

Professor Len Shackleton, labour market expert at free market think tank the Institute of Economic Affairs comments on the latest ONS labour market data

“Labour market data should always be approached with caution. Most figures are grossed-up survey-based numbers, several months in arrears, and often corrected at a later date. Nevertheless they probably give us a better impression of what’s happening than GDP figures, which really are informed guesswork on which you would be advised not to bet the house. 

“The latest employment data, covering June to August (but supplemented with payroll data for September) paint a picture which is little different from last month’s release. There is good news and bad news. 

“The upbeat story is that unemployment remains low, with the unemployment rate the lowest since 1974 and the numbers seeking work significantly lower than the number of vacancies. Hours worked are up and it’s great to see that youth unemployment and redundancies have fallen again.

“But, as last month, there are worrying signs.  

“Economic inactivity is the state of neither being in work nor actively seeking work. It has increased among the young – mainly because more have entered full-time study, so not really a worry – and the 50-64 age group. 

“Many of the older group are long-term sick; the figures for this are at a record high. Some put this down to Long Covid, others to delayed treatment in our log-jammed NHS. Others see an element of malingering. We just cannot tell from these data. 

“What is always worth noting, though, are the big variations in inactivity between regions. Working-age inactivity is 25.5 per cent in the North East and 25.3 per cent in Wales, but only 19.2 per cent in the South East and 19.1 per cent in the South West. There is much levelling-up still to be done, it seems. 

“Finally, earnings rose sharply over the early summer, but not enough to keep pace with rapidly-gathering inflation. Real wages fell by 2.4 per cent compared with the same period last year.  

“And, to add to the pressure on the government in current industrial disputes, the figures show that nominal pay increases in the private sector were running at nearly three times those in the public sector. This is going to make it very difficult for the government to hold the line on current pay offers.” 

Labour market overview, UK: October 2022

Original article link: https://iea.org.uk/media/iea-labour-market-expert-comments-on-ons-labour-market-report/

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