The jobs miracle: digging deeper

The job figures have been looking much better recently. The employment rate continues to rise and wages have even started picking up. The number of full-time employee jobs passed its pre-recession level sometime last year, so the recovery no longer looks as dependent on self employment as it did a year or so ago.

If we look a bit deeper, though, it is clear that some things have changed since the recession. The shape of the labour force is different. These charts from the ONS Economic Review in September show how the composition of the workforce has shifted away from full-time employment and towards self-employment over the last decade and a half.

Screen Shot 2015-10-21 at 14.52.14

The proportion of full-time employees in the workforce started falling in the mid-2000s and fell sharply after the recession.

Screen Shot 2015-10-21 at 15.18.48

The gender split is interesting too. It is only in the last few months that the number of male full-time employees passed its previous pre-recession peak and it hasn’t shown much sign of rising any further.

CRSPF7FUcAAw7qp.png-large

Chart via Resolution Foundation.

This gets stranger still when you look at the employment differences between the UK-born and those from outside the UK. This chart, posted by Michael O’Connor, shows that the rise in UK-born employment was stopped dead by the recession and it struggled to recover afterwards. It returned to pre-recession levels late last year only to fall again in recent months. Non UK-born employment, after a slight fall in 2008-09, has continued to rise.

CQtZTE1WEAQyEgP.png-large

Breaking this down further reveals an even sharper split. There are still around 300,000 fewer UK-born workers in employee jobs than there were before the recession, while there are close to 1 million more non-UK  born employees. Take away the self-employed and the job recovery among the UK-born has been slow.

Emp by country of birth

Source: Labour Force Survey, figures from Apr-Jun for each year.

Why might this be? No doubt some will put forward the taking-our-jobs theory but I suspect this has a lot to do with where most of the job growth is happening. Since the recession, most of the net job increase has been in London. Again, once you remove self-employment from the picture, job growth in some of the regions is poor. The North-East, West Midlands, Yorkshire and (surprisingly) the South East still have fewer people in employee jobs than before the recession.

Emp by region

Another slant on this comes from the Business Register and Employment Survey published by the ONS last month. This surveys businesses rather than households. Its employment figures therefore include employees and the self-employed running registered businesses but leave out the self-employed whose turnover is under the VAT threshold. It is therefore a reasonable measure of viable and stable jobs. On this basis, the figures for the Northern regions don’t look very good at all while London and its surrounding area has seen most of the employment growth.

Screen Shot 2015-10-21 at 16.56.17

And, of course, London is where most migrants to the UK go. As Feargus O’Sullivan noted earlier this year, Europe’s population is shifting to the North-West and a lot of that migration is coming to London. The UK’s capital is the biggest city in the EU by some distance and it is a magnet for the young and ambitious.  As this chart from the Resolution Foundation’s new Earnings Outlook dashboard shows, the share of jobs going to those born outside the UK is much higher in London than anywhere else in the UK.

Screen Shot 2015-10-21 at 16.39.05

What seems to have happened is that jobs disappeared from some places in the recession and haven’t come back while, at the same time, there have been a lot more new jobs created in London. This has hit some people particularly hard. Those born in the UK and living in northern England have seen slow or non-existent employment growth and have filled the gap with self-employment, much of it low-paid and precarious. Which might go some way to explaining things like this.

How the jobs miracle looks depends on who and where you are. It might look miraculous when viewed from London, where most journalists live. Lots of good jobs are being created and lots of new people are arriving to take them. In other parts of the country, though, things are still slow and people feel bemused when they hear commentators announce that the slump is over. If there is a jobs miracle, a lot of people are still waiting to see the magic.

Update

I was accused of being “a bit shady” yesterday (well it wouldn’t be the first time) for using absolute numbers in the change in employment by region chart.

Here, then, are the same numbers expressed as a percentage change. As you would expect, the percentage change in self employment is much bigger everywhere as it started from a lower point in the first place.

Emp by region percentages

My intention here, though, wasn’t to emphasise the hugeness of London’s job gains compared to everywhere else. It was to point out that, in some parts of the country, the employment increase is almost entirely due to self-employment.

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8 Responses to The jobs miracle: digging deeper

  1. Pingback: The jobs miracle: digging deeper | Flip Chart Fairy Tales | sdbast

  2. metatone says:

    Great post.
    I live in London and it feels like the economy is growing here at a fair clip.
    But we can see in dealing with companies that have a more national consumer base that they are not as optimistic.

  3. BILL WELLS says:

    The movements in ‘native’ employment relative to migrant employment is largely driven by the relative rates of population growth. As Table 4.5 in the BIS/HO report [below] shows the employment rate of the ‘native’ population has been increasing.

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/287287/occ109.pdf

    The difference in population growth is (a) because of the large increase in net migration for migrants and (b) very slow ‘native’ population of working age is because the Post-War ‘baby boom’ which peaked in 1946-48 are now passing into state pension age.

    The report goes up to 2012 before the rapid employment growth of 2013-14. I suspect that the employment rate of ‘natives’ have risen substantially since. Also, when doing these calculations the most appropriate disaggregation is by citizenship not foreign born. This is because citizens – whether foreign born or not – are less restricted in the employment they take up.

  4. Ominous says:

    To what extent do you think this is due to demographics? Full-time employment may yet to have recovered its pre-crisis peak in many regions, but maybe this reflects a fall in their working age population? Unemployment rates have not diverged as much as the employment figures. Would be interested to see any analysis or thoughts you may have on this topic.

  5. mrkemail2 says:

    All described here:
    http://www.3spoken.co.uk/2014/06/how-immigration-affects-uk-economy.html?m=1
    “However if you allow an unskilled migrant to come in, then the chances of creating a job that will match somebody else decrease significantly. The multiplier doesn’t have as strong an effect. More likely you will just recreate nearly the same job you just filled.

    And that is what we see. Over time the number of people goes up, the number of hours demanded goes up, but the rate of under engagement stays about the same. If the total goes up and the rate stays roughly the same then the number of people unemployed, underemployed and inactive continues to go up – each one of those cases being a personal disaster for the individual involved.

    So allowing unskilled migrants into the country is great for the business involved and great for GDP, but it offloads costs onto the existing unemployed (who don’t get trained) and society at large (which struggles to maintain an infrastructure that can cope, and suffers lower productivity and wage growth ). Again business gets to socialise their costs to increase private profit, and we see the impact in terms of lower productivity and lower business investment across the economy and a degree of social unrest.

    A rational immigration policy is one that concentrates on high value individuals and one that makes those visas very expensive for the businesses involved. That way business is more likely to choose to improve the capital stock of the nation rather than going straight for the ‘nick somebody else from abroad’ option.”

  6. Andrew Neather says:

    The fact is that there are certainly fewer indigenous Britons alive today than there were even 10 years ago.
    Autochthnous Britons stopped reproducing sometime in the 1970s – this has filtered down to the potential work pool.
    ALL of the population growth since then has been due to immigrants and the descendants of immigrants.

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