Shifting economic sands
Tony Ward is managing director of Home Funding
On the face of it the latest unemployment statistics look pretty good.
UK unemployment fell in the last three months of last year while the people in work jumped to a new record. The jobless total fell 14,000 between October and December to be 2.5m. Total employment was up 154,000, up to 29.7 million. So good news.
So why is it that this is happening while the economy remains so sluggish?
As some analysts suggest, many companies are holding on to staff in the hope that an upturn around the corner. Some are even recruiting although I suspect not on any grand scale. However what is true is that redundancy rates are much lower than in the early 2000’s when growth was much higher.
Worryingly though if the number of people in work is rising and the economy remains stagnant, it suggests that the British economy is less productive.
So are we heading for a grim place where Britain is becoming a lower wage lower productivity driven economy? Unlike some economists I think not.
But what is very apparent is that there is a huge change in demographics going on. Perhaps driven by necessity, more people than ever are becoming self-employed or turning to part time employment.
The Office of National Statistics report that between October and December 2012, full time employment was 378,000 higher than in the April to June quarter of 2008, the first quarter of the recession. But part-time work was 572,000 higher compared with the same period.
In the near future I see this trend continuing.
Something for economists to consider going forward.