Unemployment has risen to 4.2%, the first time in four years it has topped 4%.
That’s lower than the experts expected, they thought the rate would blow out to 4.5% or more. But that’s the power of a full employment policy. Because we’ve had such low unemployment for so long, employers are reluctant to lay off staff or cut wages during a lean period. The greatest achievement of the Labour-led governments to date has been getting unemployment down.
We also have to understand what ‘unemployment is 4.2% means’. It means that of the adults who say they are in work or looking for work, 4.2% don’t have work. So, there’s another variable at play, not just the number of jobs but how many adults are participating in the work-force. Because labour-force participation changes, it is possible for employment and unemployment to grow at the same time if labour-force participation grows. That’s what happened last quarter. Labour-force participation rose from 68.6% to 68.7%. The number of employed people rose 2,000 (0.1%) to 2,172,000 while the number of unemployed rose 6,000 (6.3%) to 94,000. There are 22,000 more jobs now than there were last year.
The problem is that our economy is no longer adding jobs fast enough to get all new members of the workforce into work. That’s a bad thing but at least our economy is not yet shedding jobs.
That’s unlikely to continue to be the case. The mess the financiers have made of the global economy will create damage here, and there will come a time when the number of jobs starts to fall. And that’s why it’s good to see Labour and its allies focussing on policies to create more worthwhile jobs. As Clark said last night, their economic stimulus package is about “jobs, jobs, jobs”.