Don't be fooled by the employment increase

Total unemployment is the highest since 1994 -- under-25s and northerners are bearing the brunt.

No amount of spin can get around the fact that there was bad news yesterday from the Office for National Statistics on the labour market. This was not much of a surprise given that the data from several qualitative surveys has been less than stellar over the past few weeks. The KPMG/Rec Report on Jobs also showed that permanent placements fell for a third month running in December, while temporary billings were also down for the first time in 29 months. The British Chamber of Commerce's Quarterly Survey for Q4 2011 suggested that firms were once again shaking out workers.

Firms reported in the survey over the least few months had employment falling at a faster pace than previously in both manufacturing and services. Expectations for employment over the next few months fell in both sectors, and precipitously so in manufacturing.

The big news was the largely unexpected increase in the unemployment rate; up 0.3 per cent on the quarter and up 0.1 per cent on the month to 8.4 per cent -- the highest it has been since the end of 1996. The total number of unemployed now stands at 2,658,000; the highest it has been since the autumn of 1994. The number of unemployed looks set to hit the three million mark this year, as the economy heads back into recession.

In other news, employment on the quarter was up 18,000 but -- as can be seen from the table -- this was driven entirely by older folks aged 65 and over. The burden of rising unemployment and declinign employment is falling disproportionately on people under age 50.

 

The numbers of youngsters under age 25 who are unemployed now stands at 1,043,000 -- giving an appalling unemployment rate of 22.3 per cent. Forty four per cent of the increase in unemployment on the quarter was accounted for by youngsters.

Some coalition supporters tried to wriggle their way out of this bad news. On his blog, David Smith continued his theme that there isn't really a youth unemployment problem, arguing that:

The rise in youth unemployment looks to be mainly a full-time student phenomenon.

Excluding them, there was an increase of just 8,000 over the latsst (sic) three months. Including them, there was a rise of 52,000.

The numbers on the quarter are below. As in every country in the EU, the youth employment count includes full-time students in part-time jobs, while the youth unemployment count includes full-time students and unemployed searching for part-time jobs.

 

Smith conveniently failed to point out that the increase in employment among those in full-time education entirely explains the overall increase in employment but doesn't exclude them from the overall count. The decline in youth jobs is driven entirely by those who are not full-time students.

Excluding full-time students, there was an decline of just 48,000 over the latest three months. Including them, there was a decline of 28,000.

Sorry, good try David, but you can't have it both ways. Fiddling the figures doesn't work.

Other bad news on the labour market was that:

  1. The number of full-time jobs was down 57,000 on the quarter
  2. There are 590,000 people who have temporary jobs because they can't find permanent jobs
  3. There are a further 1.3 million who have a part-time job because they can't get a full time job
  4. Earnings rose by 2.1 per cent on the quarter and the month, so despite the drop in the CPI this month, workers are still receiving real wage cuts.
  5. Unemployment rates are now in double digits in the North East (12.0 per cent) and Yorkshire and the Humber (10.0 per cent).

In response to all this, Employment Minister Chris Grayling said yesterday:

The overall level of unemployment is, and will remain, a major concern for the government. The latest figures reflect the current challenging economic climate . . . Despite the exceptionally difficult economic circumstances, finding work for the unemployed will remain top of the government's agenda.

Top of the agenda? Doesn't exactly look that way does it, as unemployment heads inexorably upwards? I dread to think what is happening to policies further down the government's agenda!

It remains clear that the government is not finding work for the unemployed. Maybe it's time for a trip to the North East, Chris, to see how well your strategy isn't working?

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

Getty
Show Hide image

Constitutional expert: Scottish independence “sweet deal” for EU

The remaining member states know a bargaining chip when they see one. 

An independent Scotland could succeed in staying in the European Union, despite legally having little power to block Brexit, a constitutional expert has argued.

His comments come after the German MEP Elmar Brok, an ally of Chancellor Angela Merkel, said the EU27 could “make a fuss” over Scotland in the Brexit negotiations. 

Jeff King is a professor of law at University College London, and a specialist in the UK constitution.

He said that the Supreme Court ruling on Article 50 had confirmed that Scotland would be unable to veto Brexit from within the UK. 

But he argued this did not mean Scotland would need to leave the EU. 

“Independence for Scotland could very well be a sweet deal for the rest of the European Union,” he told a European Commission event.

“The independence movement, which has some extremely good politicians in it, is going to be in the strongest position they have been for a long time.”

A multi-layered game of bluff

The SNP's Brexit negotiations currently resemble a rather wooden play. It is being acted out for the benefit of Scotland’s sceptical majority, who, polls suggest, would not vote for independence just because of Brexit. They have to be convinced. 

The latest act is the Scottish government’s paper, Scotland’s Place in Europe. First, it asks for a Brexit Britain to stay in the single market (Theresa May has already ruled this out). Second, it asks for a different deal for Scotland, along the lines of the “Norway option”. And third, it asks for a share of the EU powers now being repatriated to be devolved to the Scottish Parliament.

According to Tasmina Ahmed-Sheikh, the SNP’s trade spokeswoman at Westminster, the ball is now in the UK government’s court.

“As far as what happens next, we are really waiting for the government to confirm what their position is in relation to our document, Scotland’s Place in Europe,” she told me. “Are they going to agree to a differentiated agreement for Scotland, and if not, then a decision will require to be taken.”

If the SNP are reading their lines for the benefit of Scottish voters, they are doing so with one eye on Germany. As I’ve written before, at the time of the 2014 independence referendum, it wasn’t clear that an independent Scotland could stay in the EU. The SNP believe an intervention from Angela Merkel could provide the reassurance they need. They will be cheered by Brok’s words. 

But Germany is a negotiator too. As The Daily Record reports, there is goodwill towards Scotland in the EU27, but also an awareness that a constitutional crisis could blow up in the UK government’s face. 

If Merkel’s friends and allies continue to talk about their sympathy for Scotland, the idea that the EU considers keeping an independent Scotland in to be a "sweet deal" will seem commonplace. The question for Scottish voters then will be: but how sweet is it for us?

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.