Hopes Rise As Unemployment Falls

It seems these days that positive news stories are few and far between. However, the British public (and the Tories) can rejoice in the fact that according to the latest statistics released by the Office for National Statistics (ONS), unemployment is falling. Finally.

The number of people out of work in Britain fell by 58,000 to 1.91 million in the three months to November, which is the lowest level since 2008/2009. Putting this into context, it means unemployment now stands at 5.8% of the adult working population and in total, there are 30.8 million people in work. David Cameron’s statistics team must be having a field day with these figures because this is music to their ears.

Sit tight, it gets better. The number crunchers at the ONS also said wage growth is continuing to outpace inflation. This comes after the longest decline in living standards for the best part of a century. In 2014, annual wages increased by an average of 1.8%. The importance of wages growing faster than inflation cannot be understated because higher wages result in an increase in total demand for goods and services. In other words, we get more cash to splash and in turn high inflation is countered by an increased demand for goods and services.

Coinciding with a rise in wages, the number of people claiming Jobseeker’s Allowance fell by 29,000 to 867,000 – the 26th consecutive monthly reduction. As with every story however, there are two sides to it. Although unemployment had been on the decline, the trend has taken place at the slowest pace since June 2013. Inevitably this is a cause for concern because just like ex-England striker Michael Owen, the hiring spree may have peaked too soon. The fact is that youth unemployment is on the rise – there are now 764,000 jobless 16-24 year-old, the first quarterly rise since June to August 2013.

In Britain, we solve most of our problems by sticking the kettle on. Business Secretary Vince Cable has gone slightly beyond that by reaching out to firms to ‘invest in the UK and equip British workers with the skills they need to compete in the jobs market.’ Analysts have warned however that slowing growth in the Eurozone and uncertainty about the outcome of May’s general election could prompt businesses to hold back on investment plans.

There has also been controversy as to how reliable the falling unemployment figures are. According to the Claimant Count Index, which measures the number of people receiving out-of-work benefits, unemployment has also continued to fall. The claimant count was 823,900 in December 2014, down 24,200 on the month. That figure compares to a fall of almost 40,000 in November. The rate at which those figures have fallen have prompted critics to claim that Benefits sanctions are overused to reduce claimant numbers. Uh oh. Whereas the rationale behind sanctioning those on benefits was to punish the work-shy, this is instead a sly way of pushing down claimant numbers to cut back on the benefits bill, creating an image that more people are working.

To ensure the fall in unemployment isn’t a flash in the pan, we must confront the realities of statistics without manipulating them. Perhaps then, will David Cameron be able to emulate one of his distinguished predecessors in Harold Macmillan and proclaim that Britain ‘have never had it so good’.

 

By Dre Efthymiou

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