Olympics and self-employed boost UK employment figures

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The latest Labour Market Statistics report from the Office of National Statistics (ONS), published yesterday, brought rare good news on employment, perhaps attributable to a boost given by the Olympic and Paralympic Games. However, some observers said the underlying weaknesses of the UK economy persist.

The employment rate for those aged from 16 to 64 was 71.2%, up 0.5 on the quarter, May to July 2012, which saw the start of the Olympics. The ONS noted that it expected further Olympics-related results in the August to October quarter.

There were 29.56 million people in employment aged 16 and over, up 236,000 on the quarter. The unemployment rate was 8.1% of the economically active population, down 0.1 on the quarter. There were 2.59 million unemployed people, down 7,000 on the quarter, but up 61,000 on the year.

Ian Brinkley, director of The Work Foundation, said: “The overall figures are remarkably good. This is the third quarter that total employment has increased despite the economy apparently being in recession – still not enough to confirm a trend, but definitely not a blip. The private sector has continued to hire in large numbers, although the overall performance may also have been boosted by a temporary slowdown in public sector job losses in the three months to June.

“What is striking is how little impact this has had on unemployment – despite the large numbers of jobs created, unemployment has fallen by just 7,000. Large numbers of students, retirees and people on long-term sick leave seem to be returning to the jobs market, putting extra pressure on it. The rapid growth of the working age population is also having an effect. This development shows just how much of the pain in the labour market has been hidden in the past. There is still a long way to go before unemployment returns to normal levels,” Brinkley said.

The inactivity rate for those aged from 16 to 64 was 22.4%, down 0.5 on the quarter. There were 9.01 million economically inactive people aged from 16 to 64, down 181,000 on the quarter.

Total pay (including bonuses) rose by 1.5% on a year earlier, down 0.3 on the three months to June 2012. Regular pay (excluding bonuses) rose by 1.9% on a year earlier, up 0.1 on the three months to June. The number of people in employment aged 16 and over increased by 236,000 on the quarter to reach 29.56 million, the largest quarterly increase since the three months to July 2010.

Neil Carberry, CBI director for employment and skills, said: “Businesses tell us that times are tough, but opportunities to grow remain. Today's labour market figures confirm this, with firms creating jobs at a robust pace, more than offsetting public sector job losses in the second quarter. Total unemployment has fallen, and fewer people are claiming jobseeker's allowance. “Unemployment among young people remains a huge challenge. The Government cannot afford to lose focus on this vital issue.”

The number of full-time workers increased by 102,000 on the previous quarter to reach 21.44 million and the number of part-time workers increased by 134,000 to reach 8.12 million, the highest figure since comparable records began in 1992. The number of employees and self-employed people who were working part-time because they could not find a full-time job increased by 24,000 on the quarter to reach 1.42 million, the highest figure since comparable records began in 1992.

Gerwyn Davies, labour market adviser at the Chartered Institute of Personnel and Development (CIPD), said: “Today’s figures offer further evidence that the increase in employment is underpinned more by growth in self-employment than any increase in the overall number of employees, which has actually fallen during the past year. The results also continue to show an increase in the proportion of temporary, part-time workers who would like permanent, full-time work.

“It is interesting to note that the trajectory of public sector job losses since 2010 has slowed sharply in recent months, which may confirm the theory that many public sector employers have front-loaded job cuts,” Davies said.

Xenios Thrasyvoulou, founder and CEO of the freelance jobs marketplace PeoplePerHour, commented: "The riddle of why the jobs market continues to defy economic gravity may have finally been answered. The latest data reveal that while the dole queues shrank by 15,000 people last month, this was not down to the economy piling on new, full-time jobs. Instead it's part-time work that is taking up the slack. Over the past quarter, the number of people working part time because they could not find a full-time job leapt to the highest figure on record.”

The number of people unemployed for over one year was 904,000. This is the highest figure since the three months to May 1996 and it is up 22,000 on the previous quarter. The economic inactivity rate for those aged from 16 to 64 for the three months to July 2012 was 22.4%. This is the lowest figure since 1991 and it is down 0.5 percentage points on the previous quarter. The number of economically inactive people aged from 16 to 64 fell by 181,000 over the quarter to reach 9.01 million.

The number of people claiming Jobseeker’s Allowance fell by 15,000 between July and August 2012 to reach 1.57 million.

The sector showing the largest increase in jobs over the quarter was professional, scientific and technical activities, which increased by 87,000 to reach 2.56 million. The sector showing the largest fall in jobs over the quarter was human health and social work activities, which fell by 60,000 to reach 4 million.

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