Tuesday’s labour market figures show a predictable deterioration. The headline is the 5.1% unemployment rate, which, apart from a brief blip for Covid, is the highest in a decade.
It is worryingly high for new entrants to the jobs market – 13.4% for 18–24-year-olds. If you are effectively locked out of a job in your first years after graduation or leaving school, it is very difficult to build a sustainable career in the years ahead.
No wonder mental health problems are surging for young people.
Most of the other indicators are also going in the wrong direction, with the total of those in employment falling.
Small changes in these figures are not very reliable, and come from three separate sources, but it’s difficult to deny that it’s a gloomy picture for the private sector, where employment is falling overall and particularly amongst the woefully neglected self-employed.
Public sector employment, however, continues to expand, albeit slowly. Caveats apply, of course, but the public sector also appears to be doing better in pay, with earnings up by 7.6% on an annual basis, as against just 3.9% in the private sector. Vacancies are down again.
None of this is surprising, given the increase in employers’ national insurance contributions, the rise in minimum wages (especially sharp for younger workers) and the looming regulatory changes in the Employment Rights Bill. This last week, a further worry for employers is the lifting of the cap on compensation for unfair dismissal, purportedly a quid pro quo for the concession over Day One rights, but which may, in the longer term, be even more problematic.
The last government did many things wrong, but its employment record – in particular the surprisingly rapid recovery after Covid – was not at all bad. The current deterioration, which may herald a real recession, is down to this Government’s cack-handed and doctrinaire policy choices. They will have to own it.
