Wednesday, June 13, 2007
Benign earnings
Posted by David Smith at 10:15 AM
Category: Thoughts and responses

Unemployment fell on both measures in the latest official figures but earnings growth remains benign, at 4% even including bonuses. This is a remarkable story. Further details on earnings here. The ONS's take on the job market is that the employment rate is falling and unemployment is flat. Details here.


My take on the labour market figures is that the survey-based figures show a pretty slack labour market - where the worrying thing from an economic point of view is that inactivity is rising - so moves are between employment and inactivity rather than between employment and unemployment. As there seem to be gender differences, this would be a typical pattern for slackness particularly affecting women.

The fall in claimant count I would count as an administrative shock similar to that following the introduction of Jobseeker's Allowance in 1995 - but over a longer period. JSA sanctions and disallowances rising sharply would support the view that benefit administration has been sharply tightened. Therefore not an economic trend, although if people are pushed to look for work harder there may be some impact.

Posted by: paulbiv at June 13, 2007 01:06 PM