Skip to Content

Coffee House

Good jobs news goes against grain

15 August 2012

11:16 AM

15 August 2012

11:16 AM

Ministers are generally cautious in welcoming falls in unemployment in case they represent a blip for just one quarter. But Iain Duncan Smith was pretty chipper this morning when the Office for National Statistics announced a fall in the jobless stats for the fifth quarter running and the strongest employment rise since the middle of 2010. In the three months to June 2012, 29 million people were in work, up by 201,000 on the previous quarter.

The employment rate rose by 0.4 per cent to 71 per cent, and there are 4,000 fewer unemployed young people.  The number of unemployed people fell by 46,000 to 2.56 million.

As the graph below for changes in employment level by sector up to the first quarter of this year shows, the private sector is showing a strong recovery as the public sector contracts. The ONS has since made some changes to the way it calculates the data per sector, which makes the Q2 figures a new set.


If you focus merely on the change by sector since the formation of the coalition government, you can see how dramatic the shift has been:

Duncan Smith appeared on Sky News within a few minutes of the ONS announcement to say:

‘It’s not just over the last few months, the last couple of quarters, you take it from 2010 the private sector has created nigh on a million new job against a backdrop of difficulty. So you have to take your hat off to those people who, up and down the country, are working hard and running these jobs, it’s down to them that we’re seeing a fall in employment in difficult times, a rise in employment, a fall in female unemployment, and also, importantly, a fall in youth unemployment, as they begin to take on younger people on some of the work programmes we’re bringing through.’

The Work and Pensions Secretary used the figures to defend the government’s work experience programme, buoyed by the success his department recently enjoyed in the High Court, where a judge ruled the scheme was not ‘slave labour’. He also took aim at Labour, saying ‘the last government spent money like drunks on a Friday night, and we’re having to pay the bill for it’.

This last quote was his attempt to explain what is actually quite an odd set of figures. There was a 0.7 per cent rise in the employment level in the second quarter of this year, at the same time as Britain saw an estimated 0.7 per cent drop in GDP. As well as an increase in part-time jobs, the 1.6 per cent rise in total pay – well below inflation – might go some way to explaining these positive employment figures, which go against the grain of other economic data.

It’s worth noting the regional differences in today’s stats as well. Unsurprisingly, London saw the biggest increase in its employment rate, which is up 1.5 percentage points. This was followed by a 1.4 per cent increase for the North West, and a 1.1 per cent rise in the rate in the South West. It was at its highest in the east of England – at 75 per cent – and its lowest in the north east, at 66 per cent. The latter also has the highest unemployment rate of 10 per cent, the highest inactivity rate of 25 per cent, and the highest claimant count rate at 7.7 per cent. These regional differences may further increase when the ONS releases the figures for Q3, which is when Duncan Smith believes the boost from the Olympics will be the most obvious. Ministers will want to show they are not just creating a bubble of recovery in London and the south east while the rest of the country struggles.


Show comments
Close