Real wages down and unemployment stubbornly high, but could that be good news?

Unemployment's fall has stopped, but that could signal a recovery in productivity.

The ONS has released the latest labour market statistics, showing a 0.2 percentage point decline in the unemployment rate to 7.8 per cent in the last three months (2.51 million unemployed people, down by 57,000 people). The employment rate, however, was also down by 0.1 percentage points to 71.4 per cent over the same period (29.71 million employed people, up by 17,000 people).

Other headline stats show long term unemployment increasing by 15,000 to the highest level since 1996, youth unemployment decreasing by 0.2 percentage points to 20.9 per cent, and total pay increasing by 1.7 per cent, leading to a 1 per cent decrease in real wages.

As you can see from the first graph above, the quarter-on-quarter fall in unemployment is largely reversing the rise that was reported this spring. If you look at the month-on-month statistics, designated as "experimental" by the ONS due to their habit of fluctuating fairly wildly, we can see that unemployment was down by slightly over half a percentage point since April.

That's important, because it adds further support to the theory that the long-term improvement in the labour market has been replaced by stagnation. Economics reporters tend to focus on the fact that unemployment is down from a high of 8.4 per cent, even against a background of stagnant GDP. And indeed, for over a year, that decline was nearly constant. But the unemployment rate hit a low in December of last year, and since then it has been fluctuating in the high sevens.

That's bad news for Cameron and Osborne, because falling unemployment was frequently used as a fig leaf to cover the atrocious GDP growth. All the signs indicate that next week's GDP figures will be good, but they may not be good enough.

But it might paradoxically be good news for the country. The disconnect between employment and growth was due to productivity in Britain plummeting. In simple terms, a British worker doing an hour's work simply wasn't producing as much value after the recession as they were before. There's a lot of theories as to why, ranging from low morale and lazy workers to insipid investment and low demand, but regardless of why, they all point to the same conclusion: if GDP is to properly take off, productivity has to recover. The hope is that slowing decline in unemployment could be because the recovery is coming to productivity; and our catch-up growth might finally be around the corner.

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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Labour tensions boil over at fractious MPs' meeting

Corbyn supporters and critics clash over fiscal charter U-turn and new group Momentum. 

"A total fucking shambles". That was the verdict of the usually emollient Ben Bradshaw as he left tonight's Parliamentary Labour Party meeting. His words were echoed by MPs from all wings of the party. "I've never seen anything like it," one shadow minister told me. In commitee room 14 of the House of Commons, tensions within the party - over the U-turn on George Osborne's fiscal charter and new Corbynite group Momentum - erupted. 

After a short speech by Jeremy Corbyn, shadow chancellor John McDonnell sought to explain his decision to oppose Osborne's fiscal charter (having supported it just two weeks ago). He cited the change in global economic conditions and the refusal to allow Labour to table an amendment. McDonnell also vowed to assist colleagues in Scotland in challenging the SNP anti-austerity claims. But MPs were left unimpressed. "I don't think I've ever heard a weaker round of applause at the PLP than the one John McDonnell just got," one told me. MPs believe that McDonnell's U-turn was due to his failure to realise that the fiscal charter mandated an absolute budget surplus (leaving no room to borrow to invest), rather than merely a current budget surplus. "A huge joke" was how a furious John Mann described it. He and others were outraged by the lack of consultation over the move. "At 1:45pm he [McDonnell] said he was considering our position and would consult with the PLP and the shadow cabinet," one MP told me. "Then he announces it before 6pm PLP and tomorow's shadow cabinet." 

When former shadow cabinet minister Mary Creagh asked Corbyn about the new group Momentum, which some fear could be used as a vehicle to deselect critical MPs (receiving what was described as a weak response), Richard Burgon, one of the body's directors, offered a lengthy defence and was, one MP said, "just humiliated". He added: "It looked at one point like they weren't even going to let him finish. As the fractious exchanges were overheard by journalists outside, Emily Thornberry appealed to colleagues to stop texting hacks and keep their voices down (within earshot of all). 

After a calmer conference than most expected, tonight's meeting was evidence of how great the tensions within Labour remain. Veteran MPs described it as the worst PLP gathering for 30 years. The fear for all MPs is that they have the potential to get even worse. 

George Eaton is political editor of the New Statesman.