Unemployment drops second month running

Underemployment carries on rising

A McDonalds recruitment leaflet.
Fewer unemployed people, but more underemployed people. Photograph: Getty Images

This month's labour market figures show a drop in the unemployment rate for a second month in a row. The news contrasts with the release of the growth figures earlier in the month, which put the economy back in recession.

The headline indicators are undoubtedly good news. The employment rate was 70.5 per cent, up 0.2, or 105,000 people, in the three months to March. The unemployment rate has fallen 0.2 points in the quarter, and now stands at 8.2 per cent. There are now 2.63 million unemployed people, 45,000 fewer than in December.

Digging deeper, the same worrying trends that we saw last month are still there. The fall in unemployment was entirely due to a rise in part-time work. Full-time employment actually fell by 13,000 people, caused by a massive fall in employees working full time being offset by a slight rise in full-time self employment. Meanwhile, the total number of people working part time rose by 118,000 people.

The stats also break down the reasons why people are working part-time, and again shows a quarter-on-quarter increase in the number of people doing so because they can't find full-time work; 1.4 million people are in this situtation, up 5 per cent and 73,000 people from December.

The temporary employment stats showed the same trend. 15,000 more people were employed temporarily in the three months leading to March, a 1.0 per cent increase. As with last month, there was a quarter-on-quarter increase on the number doing so because they could not find a permanent job: 14,000 extra people, a 2.4 per cent rise. Unlike part-time employment, however, this appears to be slowing down.

As we wrote last month, these increases are good; it is better to be employed, even temporarily, than not at all. But the unemployment crisis being replaced by an underemployment crisis is a very minor improvement indeed.