UK employment rate increases

Official figures for UK employment were higher from May to July this year, according to the Office for National Statistics (ONS) statistical bulletin on the UK Labour Market released on Wednesday.

From May to July 2015 there were 31.09 million people in work, an increase of 42,000 compared to February to April 2015. The latest figure is also up by 413,000 over the same period in 2014.

ONS data shows that there were 22.74 million people working full-time in the UK in the period reported, 361,000 more than the prior year, while there were 8.36 million people working part-time, a rise of 52,000 year-on-year.

The proportion of people aged from 16 to 64 who were in work, which is reported as the employment rate, amounted to 73.5%. This percentage was only slightly different compared with February to April 2015, but higher than for a year earlier, when it was recorded as 72.8%.

British people who were not in work but seeking and available to work, numbered 1.82 million, which meant there were 10,000 more unemployed people than for February to April 2015. However, this number was 198,000 fewer than May to July in 2014.

The UK unemployment rate, which represents the proportion of the labour force who were unemployed, stood at 5.5%, unchanged compared with February to April 2015. But the rate was 6.2% lower than for a year earlier.

According to the ONS report, there were 8.99 million people aged from 16 to 64 who were economically inactive, meaning those not working and not seeking or available to work. This figure was 24,000 lower than for February to April 2015 and 65,000 lower than for the year before. The proportion of people aged from 16 to 64 who were economically inactive, known as the inactivity rate, was 22.1%, flat compared with February to April 2015 but down slightly from a year earlier , when it was recorded as 22.3%.

When comparing May to July 2015 with a year earlier, both total pay including bonuses and regular pay, not excluding bonuses, for employees in the UK, was revealed to have increased by 2.9%.

Bank of England to link interest rates to job growth

The Bank of England governor Mark Carney stated today that the Bank will not raise interest rates until the high rate of unemployment in the UK has decreased from the current rate of 7.8% to 7%, or below, when the Bank would then re-examine interest rates.

According to Carney, who was appointed as BoE governor last month, about 750,000 jobs would need to be created to achieve this reduction in the unemployment figures, which could take three years. He said the unemployment threshold will hold unless inflation levels threaten to rise too quickly or if it poses a significant threat to financial stability. Also, the Bank would not cut back on its £375bn asset purchase programme, known as quantitative easing (QE), until the threshold was reached.

Analysts reportedly expect unemployment to fall slowly from its current level to an average 7.1 percent in the third quarter of 2016, the end of the forecast horizon.This indicates that the BoE expects to maintain interest rates at the same level until at least then, unless its conditions are broken. However economic data is said to show that the recovery in the UK economy is picking up pace and the jobless rate could fall significantly faster than expected. Recent official figures also revealed that there was an upsurge in manufacturing output during June this year and research has shown that the service sector and housing market is growing. Experts have forecast that UK inflation will fall to 2% in mid-2015.

The Governor commented that: “While job growth has been a relative positive in recent years, unemployment is still high. There are one million more people unemployed today than before the financial crisis; and many who have jobs would like to work more than they currently can. The weakness in activity has also been accompanied by exceptionally weak productivity. It is for these reasons that the MPC judges there to be a significant margin of slack in the economy, even though the extent of that slack, particularly the scope for a productivity rebound, is very uncertain.”

Unemployment in Spain reaches new heights as tourism trade slows

Unemployment in debt-ridden Spain rose by 1.7% in September, according figures released by the country’s Labour Ministry on Tuesday.

The increase in unemployment last month follows an increase in August, with 4.7 million Spaniards currently out of work.

Analysts attribute the increase to redundancies in the service sector as the steady flow of summer tourists slows, with seasonal jobs being terminated in the winter months.

“There is a certain slowing down in the rate of increase in unemployment but the negative side is that jobs are still disappearing,” Estefania Ponte, head of economy at trading house Cortal Consors, told Reuters.

Ponte said that today’s monthly figures suggested that the unemployment rate in Spain will mostly exceed 25% in the third quarter.

Unemployment in Spain, one of Europe’s largest economies, is the highest in the European Union. Analysts are also expecting that recent floods due to torrential rains could further dent tourism activity.

 

Wage subsidies brought forward to address youth unemployment in 20 “hotspots”

Areas of the UK with high levels of youth unemployment are to benefit earlier from government help designed to tackle the problem, Deputy Prime Minister Nick Clegg announced today.

Under the plan, wage subsidies to firms hiring out-of-work 18 to 24-year-olds are to be triggered early in certain “hotspots” of unemployment among young people.

In 20 deprived towns and cities, principally in South Wales, Scotland and the North and Midlands of England, the payments will be available for young people who have been out of work for six months instead of nine.

Part of the government’s GBP1bn Youth Contract which was launched late last year, the subsidy of GBP2,275 is designed to encourage firms to take on young workers. It covers six months of employment and is equivalent to half the UK’s minimum wage for a young person.

Announcing the plan at the CBI Action for Jobs Summit, Nick Clegg said that the problem of youth unemployment predates the financial crisis and targeted support must be provided “to the youngsters who struggle to break into the workplace – regardless of whether we’re in good times or not.”

This opinion was shared by CBI director-general John Cridland, also speaking at the today’s jobs summit, who commented that youth unemployment has been rising since 2004 and said that a return to growth alone will not be enough to tackle the underlying causes of the problem.

Cridland urged businesses and the government to work together to do more to give people the skills and opportunities they need to get jobs. He also called for the range of employment initiatives to be made simpler for employers, noting that employers in England alone face 47 different initiatives that offer funding and support for businesses taking on and training young unemployed people.