Employment has almost entirely recovered to its pre-recession peak, according to today’s new figures. Total employment for May to July stood at 29.56 million — up 236,000 on the previous three months and just 12,000 shy of the 29.57 million peak of April 2008.
This recovery is thanks to the expansion of the private sector, which has added over a million new jobs in the last two years, and now employs 381,000 more people than it did before the crash. Public sector employment, meanwhile, has been cut by 628,000 since the coalition took over, and is now at its lowest level since 2001.
The scale of private jobs growth — and public job cuts — in the last quarter is exaggerated by the reclassification of 196,000 further education employees from the public sector to the private sector. Stripping this effect out, though, doesn’t make much difference to the big picture: private sector employment would still be at a record high (with 874,000 jobs added since the election) and public sector employment would be down to 2002 levels (and down 432,000 since the election)
But while overall employment is back to the happy days of early 2008, the detail is a bit less rosy. 628,000 more people are working part-time than were back then — meaning that there are 640,000 fewer full-time workers. This helps explain why the total number of hours worked in the UK each week is down by 1.1 per cent on pre-recession levels, and why GDP still hasn’t even nearly recovered yet.
There are also almost a million more unemployed than there were in April 2008, partly because the working age population has increased by 633,000 and partly because a large part of the recovery is accounted for by a rise in pension-age people in work. There are now 267,000 more over 65s in employment than there were before the recession hit, an increase of 39 per cent.
It’s also worth noting, as Citi’s Michael Saunders has, that while average pay has been rising in nominal terms, it has not kept pace with inflation — so earnings have fallen in real terms, by a full 6 per cent since April 2008.
This leads Saunders to caution that:
‘In our view, the resilience of employment is not a sign of hidden economic strength: in aggregate, people are pricing themselves into work through weakness in pay and the shift to less secure and less well paid forms of work (self- employment, part-time work, temporary jobs).’
A reminder that, while the employment recovery is good news, we shouldn’t get over-excited about it.
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