Unsurprisingly, the headlines today have been stolen by the top line unemployment figures – whichever way commentators have sought to spin them. But, beneath the surface of the employment figures lurks some nuance that may tell us more about the direction of the economy and wages.
Three aspects are particularly worthy of comment. Each could be construed as offering some tentative good news and speaks to concerns about low pay and productivity.
1. Productivity: Total hours worked increased by 0.4% from the last quarter. This contrasts with GDP growth of 0.7% in the last quarter. Could this be an early sign that the UK’s much-maligned productivity is on the mend? If it is, it is certainly not straightforward, with the latest figures indicating that while output per worker has increased since 2010, output per hour is still below the 2010 level.
2. Pay: The ONS reported that average weekly earnings, including bonus payments, rose by 1.1% comparing October to December 2013 with the same period a year earlier. However, this masks significant variation between the private and public sector. In the private sector the corresponding figure is 1.5%; in the public sector, the figure is 0.2%. Given that earnings levels in the public sector are largely a policy decision (they are being held down by pay restraint), the private sector pay level may give a better indicator of the health of the economy and of wages.
3. Part-time / full-time: There appears to be a trend towards growth in full-time work alongside a stagnation of part-time employment. Since Oct-Dec 2012, the number of full-time employees has increased (steadily) by 408,000. Meanwhile, the total number of part-time employees has actually decreased by 12,000. This is of interest for many reasons: not least concern about the rise in mini jobs. However, it should also be noted that part-time employees tend to be much lower paid than full-time employees. Analysis of the Quarterly Labour Force Survey shows the difference between the low pay thresholds for part-time versus full-time workers (calculated as two thirds of median hourly earnings). This shows that the low pay threshold for part-time workers actually declined in nominal (not just real) terms in 2012 and generally is significantly below the threshold for full-time workers.
