Jobs and work, how the UK compares
* Last week saw UK unemployment fall to the lowest level since 1974. Against a backdrop of a sluggish GDP growth this is quite an achievement. But the success of labour market policies should be judged on wider criteria. The quality of work, the flexibility of the jobs market and how inclusive and productive it is also matter. This week’s Briefing assesses the UK on each count.
* For most of the last hundred years a principle feature of economic policy has been the pursuit of low unemployment. Today policymakers tend to worry at least as much about the quality of work as its quantity. There has certainly been much discussion of the so-called gig economy and of the growth of unskilled and insecure work in the UK. But in terms of the quality of work the UK seems to compare quite favourably by international standards.
* Temporary, part-time and agency jobs along with self-employment are sometimes, and unfairly, characterised as being inferior to full-time work. Most people do these sorts of jobs because they choose to, not because full-time work is unavailable. Thus high levels of part-time work in the UK, and also in the Netherlands, Denmark, Germany and Switzerland, reflect high levels of female workforce participation. Conversely countries, such as Spain, where women are less likely to work, offer fewer opportunities to work part-time.
* Self-employment has grown over the years in the UK, but to levels that are in line with the OECD average. Levels of temporary work, a key measure of insecurity, are lower than in any other major industrialised country and the gap is especially marked for young people. In France, Italy, Spain and Germany rates of temporary work for under-24-year-olds exceed 50%. In the UK it is around 14%.
* Nor does the OECD’s broad ‘job strain’ indicator supports the idea of a crisis in the quality of work. The indicator gauges the mental and physical toll taken by work and covers everything from the intensity of work, to autonomy, flexibility of working time and scope for progression. The UK ranks as having the fourth lowest level of job strain, behind Norway, Finland and Denmark in a field of 32 rich nations.
* The second of our four criteria is labour market flexibility – the capacity of the jobs market to match labour supply and demand and, thereby, to maintain low unemployment. Flexible labour markets are marked by efficient, transparent regulation that make it easy for employers to hire – and fire – staff. The UK rates as having a highly flexible labour market, ranking in 8th place out of 140 countries in the World Economic Forum’s measure of flexibility. The UK is in the company of Canada, Switzerland, Germany and Denmark at the top end of the league, something which demonstrates that labour flexibility does not spell low levels of social protection.
* What of our third criteria, inclusiveness, the ability of people who want work to get a job? The UK employment rate, so the proportion of the working age population who are in work, is 76.1%, the highest on record and higher than in America’s famously job-rich economy. Unemployment, at 3.8%, is half the average rate for the euro area. Female workforce participation is among the highest in Europe while youth unemployment is well below the EU average.
* Unfortunately the UK falls down, and badly, on our fourth criteria, productivity. Since the recovery started UK productivity has grown at roughly one-third the rate it did in the run up to the recession. Other countries have seen productivity growth slow, but the UK’s performance has been especially poor. There are a myriad of competing explanations for what has gone wrong. Skills and basic education have been an area of longstanding weakness. In terms of vocational education and training and adult literacy the UK ranks well below many of the Northern European nations with which the UK keeps company on labour market flexibility and job growth.
* The good news, then, is that the UK has a flexible labour market, one where people have incentives and opportunities to work, and where it is easy for businesses to hire. The bad news is on productivity. Weakness here has suppressed wage growth and exacerbated public sector austerity.
* The UK has had a jobs boom. Now it needs a productivity boom.
OUR REVIEW OF LAST WEEK’S NEWS
The UK FTSE 100 equity index ended the week up 2.0% at 7,349 as sterling sold off on Brexit news.
Economics and business
* Tensions are running high in the Middle East following reported assaults on Saudi Arabian oil infrastructure by Houthi rebels from Yemen
* The Iranian ambassador to the UK warned that “there would be consequences” if a solution to the US sanctions afflicting Iran was not found within 60 days
* These US sanctions have raised the possibility of Iran abandoning commitments made under the 2015 nuclear deal. European countries are attempting to bypass the sanctions to avoid the situation further deteriorating
* The US government is readying further tariffs on $300 billion of goods imported from China which could then be imposed at its discretion towards the end of next month
* The Chinese government announced retaliatory tariffs on $60 billion of imports from the US
* The US administration declared a national emergency regarding trade in technology products. This will likely ban Chinese tech company Huawei from selling into the US market
* US President Donald Trump has delayed his decision on the imposition of tariffs on car imports by six months
* A CBI report suggests that the UK will only hit its target of spending 2.4% of GDP on research and development by 2053
* The German chemical giant Bayer was ordered to pay $2 billion in damages over claims arising from sales of glyphosate weed killer
* UK unemployment fell to 3.8% in March – the lowest since 1974 – as the economy added 99,000 jobs. Weekly earnings slowed, growing at an annual rate of 3.2% in the three months to February
* A survey of employers by the Chartered Institute of Personnel and Development found that already buoyant hiring sentiment has improved
* The euro area grew by 0.4% in the first quarter
* The founder of Richer Sounds, the UK audio-visual chain, has announced that he plans to transfer 60% of his shares to an employee-owned trust and award a bonus of £1,000 to staff for every year of service
* The UK Government is to re-nationalise probation services
* A House of Lords committee called for a halt to the planned HS2 railway linking London, the Midlands and the North so the economic case could be reassessed
* Pakistan has accepted the terms of a bail-out from the IMF
* The UK Labour party has announced that it would take the electricity transmission company National Grid into public ownership if it came to power
* The US Supreme Court ruled that the Apple App Store could face lawsuits from consumers over commission charged under antitrust rules
* Amazon has made a significant investment in the British food delivery company Deliveroo
Brexit and European politics
* Prime minister Theresa May has announced that she plans to ask parliament to ratify her Brexit deal for the fourth time early next month
* Mrs May has previously said she would resign when the deal passes, and would set a timetable for her departure if it were to fail, the BBC reports
* Boris Johnson announced he plans to run for leader of the Conservative party
* Michael Gove, Dominic Raab and Jeremy Hunt are the other front-runners according to bookmakers’ odds
* Talks between Labour and the Conservatives on Brexit have concluded without agreement
* The European Commission issued a warning to Romania over corruption and the rule of law
* The European Council voted by qualified majority to restore the voting rights of Russia to prevent the country being suspended. The rights were removed following the annexation of Crimea
* Angela Merkel has announced that she will not take any further political office, removing her from contention for an EU role
* The cost of phone calls to other countries within the EU is to be capped under new rules set by Brussels
And finally… After ordering a bottle of 2001 Chateau Pichon Longueville Comtesse de Lalande (normally sold at £260 a bottle), diners at an upmarket restaurant in Manchester were treated to a bottle of 2001 Chateau Le Pin Pomerol (normally sold at £4,500 a bottle) due to a mix-up by a waiter. The mistake was only noticed when a second bottle was ordered – plonk-er