Youth unemployment rises again
Reacting to today’s labour market statistics, Professor Len Shackleton, editorial and research fellow at the Institute of Economic Affairs said: “Today’s labour market figures show a decline in the unemployment rate to 4.9% in the three months to February. Is this good news for the chancellor, as some early headlines have suggested? Probably not.
“It is true that unemployment fell by 60,000 by comparison with the last three-month period – but the numbers inactive rose by 69,000. The unemployment rate, remember, is the percentage unemployed as a percentage of those economically active. The economy would in a sense be better off with more unemployed people – defined as those looking for work – and fewer inactive.
“Moreover a worrying sign is that, notwithstanding the falling unemployment rate for all ages, the crucial rate for 18-24 year olds rose again, from 13.7% to 14.3%. We know that prolonged periods of unemployment when young have a permanent ‘scarring’ effect, damaging people’s career trajectory for many years.
“These figures, drawn from the Labour Force Survey, necessarily lag a little behind what is happening in the jobs market just now. Slightly more up-to-date payroll employment figures are available for the month of March, and they show a fall of 11,000 compared with February. March claimant count figures – covering those receiving out-of-work benefits such as Jobseekers’ Allowance – are up slightly on February. The number of vacancies has fallen again, while nominal earnings have fallen and real earnings are virtually static.
“It’s a mixed picture, then – but there is little to suggest that the labour market’s performance is significantly improving. All the damaging measures which the government has taken, such as the hike in employer National Insurance Contributions and higher minimum wages, are still in place – and the baleful long-run effects of the Employment Relations Act are yet to work through. One of those effects will be to increase trade union powers, and this week’s tube strike will remind us how damaging this can be.”