Unemployment down, but where's the growth?

More people are in work, but things aren't necessarily better

Some more good news from the labour market figures this month. Unemployment was down 0.2 per cent or 51,000 people quarter on quarter, while employment was up 0.3 per cent or 133,000. The fabled "rebalancing" appears to finally be upon us, with public sector employment shrinking by 39,000 but amply being made up for by an increase of 205,000 in the private sector.

Even some of the nasties that have been present in the last two month's data are gone now. The number of people working full-time finally rose by 82,000, matching a continued increase in the number of people working part-time (up 83,000). Similarly, the number of people temping against their will fell slightly, with 5,000 fewer people working temporary jobs because they couldn't find permanent work.

Underemployment is still growing overall, though. Another 25,000 people are now working part-time because they can't find full-time work. But overall, the labour figures are surprisingly positive.

I say surprisingly, because they certainly seem to conflict with the reports from the wider economy. We have had two straight quarters of negative growth, and are widely expected to be in the midst of a third (the pre-spinning began even before the quarter did, with the Jubilee Weekend being blamed). So how can we have a strong labour market?

Some commentators are using the unemployment data to cast doubt on the GDP data, but that is largely clutching at straws. It's long been known that the two can diverge quite seriously – witness, for example, the American situtation, where the unemployment rate has fallen by almost 2 per cent since November 2009 with growth which (while good in comparison to the UK) is less than the fall would suggest – and it is not beyond the realm of possibility that we are experiencing a growthless recovery.

The simplest way for the two to head in seperate directions is a fall in labour productivity. This is the measure, basically, of how much is made in one hour of work by one person; although it does count literally how hard people work, it is affected far more by technology and workplace innovations. The last data release, for the fourth quarter of 2011, showed productivity falling by 0.7 per cent, and it would be unsurprising if we saw further falls for the first and second quarters of 2012.

The economic story for falling productivity in a recession is simple and relatively intuitive. When times are hard, employers are less likely to spend money on training, tools, repairs to machinery, and so on; all the sort of things which let an employee work harder and smarter. This is compounded by the fact that labour is relatively sticky; while a business doing well will spend on hiring and productivity improvements, a business doing badly is far less likely to fire their employees than they are to cut back on productivity-boosting spending. Simply put, recessions lead to drops in productivity (source):

So it is absolutely possible to be in the situation we are now, with falling unemployment and a contracting economy. It's just not entirely pleasant.

Chris Grayling, Minister for Work and Pensions, and Chris Grayling, Minister for Work and Pension. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Sacked Hilary Benn rules out standing for leadership but tells others "do the right thing"

Hilary Benn was sacked from Jeremy Corbyn's Shadow Cabinet overnight.

Hours after being sacked from Labour's Shadow Cabinet, Hilary Benn popped up again to issue a not-so-coded call for revolution. 

Despite being tipped as a potential rival to Jeremy Corbyn in the past, Benn downplayed his own ambitions and ruled himself out of standing for leader.

But while he described his decision to speak out as a personal one, he made it clear others who felt similarly should speak out.

Benn told Andrew Marr: "I have been a member of the lab party for 45 years. I've devoted my personal and political life to it, and if things are not working I think we have a wider responsiboility to the party that we love to speak out.

"Lots of people will say this isn't an ideal time. There's never an ideal time. I thought it was important to speak out."

Describing Corbyn as a "good and decent man", Benn said he was not a leader and agreed he should consider resigning: "I no longer have confidence in him and I think the right thing to do would be for him to take that decision."

He added: "I am not going to be a candidate for the leader of the Labour party. I haven't taken this decision because I want to. I have taken the decision becauuse I think it's the right thing to do for the Labour party."

As Benn was speaking, rumours of a Shadow Cabinet revolt was mounting, with Labour's last Scottish MP Ian Murray among those expected to resign.

But while there's no doubt Benn has the support of many of his fellow MPs, more than 169,000 ordinary members of the public have signed a petition urging support for Corbyn after Brexit. If there is a parliamentary coup, it's going to be bloody.