The UK job situation is one to celebrate

By Allister Heath, November 25, 2010

One of the great, widely-believed myths about the UK recovery is that it is jobless. Yet the reverse is true.

Job creation has been consistently robust over the past six months, repeatedly taking most commentators by surprise; unemployment is going down, albeit slowly.

The great news is that the private sector is bouncing back fast enough to create far more jobs than the public sector has been shedding. This is a result of the government's much-needed austerity measures.

Claimant count unemployment fell by 3,700 month on month in October after slight rises in the prior two months. This is hardly cause for uncorking the champagne, but other data is much more upbeat.

The Office for National Statistics calculates that employment has bounced back by 167,000 (or 0.6 per cent) in the third quarter - a similar increase to that enjoyed in the second quarter. In total, 320,000 extra people have found employment in the past two quarters, the highest growth since the late 1980s. This performance is the one we should be celebrating, even if progress is hardly comprehensive or ideal.

The worst is over for the UK labour market

As in recent months, part-time work is rising rapidly and accounts for the bulk of the overall increase in employment.

Firms are seeking extra workforce flexibility, partly because most remain nervous of the future; in many cases, however, individuals are also seeking a shorter working week and thus getting what they really want.

While tens of thousands of full time jobs are also being created by firms around the UK, another large chunk of the increase can be accounted for by self-employment.

Many people are using the recovery as an opportunity to go it alone, but in other cases people are being forced to become consultants because they cannot find a position as an employee. That is not ideal.

The biggest problem is that a few of the millions of people stuck on welfare and long-term benefits are getting back into the labour market.

On balance, however, the jobs picture is nevertheless highly encouraging. Recoveries are always characterised by a bounce in part-timers and the creation of thousands of new businesses. All the signs are that, despite the depth and nastiness of the recession of 2007-09, the worst is over for the UK labour market.

It is a shame that nobody seems to realise that there is more to economic news than doom, gloom and sovereign crises.

Allister Heath is editor of City A.M.

Last updated: 12:29pm, November 25 2010