Are storm clouds gathering over UK plc?

Just Recruitment Group Ltd director Peter Foy examines the latest employment figures from the ONS.

On Tuesday, 19 February 2019, the Office for National Statistics (ONS) published its regular report on the UK labour market, giving information about the latest employment figures.

At a time when most commentators are warning of impending economic meltdown, the ONS report appears to contain encouraging news.

In the last quarter of 2018, 75.8pc of people aged between 16 and 64 were employed. That is the highest figure since the first Labour Market Report was published in 1971. Male employment, meanwhile, stands at 80.3pc: the highest it has been since the first quarter of 1991. And female employment is at its highest ever figure, 71.4pc.

Other figures that contribute to an economic feel-good factor include:

  • 96pc of the 444,000 new jobs created in the economy over the last 12 months are full-time roles
  • 53pc of these roles were filled by women
  • Average weekly earnings, allowing for inflation, are higher than at any time since 2010
  • The number of people on zero-hours contracts is down by 6.3pc – a drop of 57,000
  • The number of temporary employees has remained constant at 5.6pc of the workforce, but the number taking a temporary role because they can’t find a permanent job has fallen

So, good news all round for the UK economy, despite the political uncertainty we’re currently facing.

Or is it?

One of the interesting data sets in the ONS report is the unemployment figures since 1971, reproduced below:

The graph shows that the early 1980s saw a marked growth in unemployment as the government wrestled with the unions. In the late 1980s and early 1990s Margaret Thatcher’s government was torn apart by squabbles over Europe, leading to huge political and economic instability. Then came Black Wednesday, on John Major’s watch in 1992, and the country’s ignominious exit from the Exchange Rate Mechanism (ERM). The result was another sharp increase in unemployment in the years leading up to 1993, followed by a gradual easing over subsequent years.

The tide turned again following the Global Financial Crisis of 2008. Unemployment rose steeply, before finally dipping in the run up to the 2015 general election.

My point is straightforward: political uncertainty leads to an increase in unemployment. Yet since 2012, although we have had two general elections, the destabilising Brexit referendum, a minority government and both the main political parties in an apparent state of disarray, unemployment has steadily reduced.

In the commentary I have read about the ONS employment numbers, I haven’t found a single explanation as to why or how the economy is managing not to buckle.

All of which makes me think: perhaps the bad news is just around the corner. Before a major Tsunami, the sea recedes, exposing new stretches of beach. Is UK plc enjoying a false calm when we should be heading for the hills and preparing for a tidal wave? Only time will tell.

Published: 20 March 2019

© Copyright Just Recruitment 2019

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