Unemployment

Dig out the bunting, fly the red flags in celebration, for finally we have a policy from the Labour party. Ed Miliband promised that 2013 would be the year he'd set out some 'concrete steps' on key policy areas, and to that end he's announced a jobs guarantee for the long-term unemployed. Coffee House readers will already be familiar with this scheme, as Shadow Work and Pensions Secretary Liam Byrne discussed it in his interview on this site in December.

Following my last post about the Dalkey Archive Press advert for unpaid interns I received an email from publisher John O'Brien. I think it sheds some interesting light on the issue so here it is in full: 'What started out as an announcement of two hires and then hoped-for interns who would become hires (putting aside my "characteristics" sections, if you can), all internships are on hold and will quite likely not resume. We are deluged with requests (paid or unpaid) for internships, and usually take on more than we can properly handle because people are rather desperate to get the experience, without which they cannot get the first door opened for them for a job.

It’s a bit early for predictions for 2013. But my feeling is that it could be the year of the unpaid intern, or rather, the year of the paid intern if the campaign to pay people a fair day’s pay for a fair day’s work continues to gather pace. Hazel Blears did well to secure cross-party support for a 10-minute-rule bill to outlaw the advertising of unpaid internships. It does seem odd that employers are obliged to pay the national minimum wage but can advertise that they are breaking the law. Campaigners Intern Aware has been pushing this particular cause for some time and should be congratulated for its work on the bill. The fact that HMRC is doing so little to enforce such breaches suggests it is perhaps not up to the job.

The number of people in work in the UK hit 29.6 million in August-October – the most ever — according to today's figures from the Office for National Statistics. So despite GDP still languishing 3 per cent below pre-recession levels, employment has fully recovered, with half a million jobs created in the last year: The rise in employment has been thanks to the private sector more than making up for the job cuts in the public sector.

1. Growth evaporating. The Office for Budget Responsibility once again downgraded its growth forecasts for 2012-13 and, for the first time, also did so for 2014-16. Despite that, the OBR is still slightly more optimistic than the average independent forecaster: 2. A seven year slump. On the OBR forecasts, it will now take until the end of 2014 to get back to where we were before the crash. In the 1930s, it took 'just' four years to recover: 3. Slower deficit reduction. The weaker economic outlook means the government will be borrowing more than expected. When George Osborne delivered his first Budget in 2010, the OBR predicted he'd get the deficit down to £20 billion in 2015-16. It now says it'll be £82 billion.

Today brings bad news that Tata Steel is to cut 900 jobs in the UK (at plants in South Wales, North Yorkshire, Teesside and the West Midlands). This is catastrophic news for a government that has announced its intention to rebalance the economy away from financial and professional services in the south-east (and therefore get an hearing electoral hearing in Britain’s former industrial heartlands); but that is only one aspect of the politics at play here. Tata's statement says: ‘Today's proposals are part of a strategy to transform ourselves into an all-weather steel producer, capable of succeeding in difficult economic conditions. These restructuring proposals will help make our business more successful and sustainable.

Today's employment figures don't contain much new to shout about. The number of people in work — although it rose by 100,000 on the previous quarter — is actually down very slightly from last month's record high (but still above the pre-recession peak, just). Unemployment fell by 49,000 from Q2 to Q3, although that's well within the Labour Force Survey's margin of error (so we can't be certain that it fell at all). The best news in today's figures — from the government's point of view — is probably that the headline unemployment rate is now 7.8 per cent, very slightly below the 7.9 per cent rate when the coalition took office (though again, it's worth remembering that the margin of error on that figure is +/– 0.3 percentage points).

Recently, we've been used to the economic figures being either bad news or mixed news. So today's employment stats come as a welcome surprise: it's almost all good news. They show that total employment rose by 212,000 from March-May to June-August, and now stands at 29.59 million — a record high, 18,000 above the pre-recession peak of April 2008. Since the election, a net of 616,000 jobs have been created. And unemployment is down too — by 50,000 on the previous three months, defying expectations. That means the unemployment rate has dropped to 7.9 per cent, the first time it's been below 8 per cent in over a year.

Employment has almost entirely recovered to its pre-recession peak, according to today's new figures. Total employment for May to July stood at 29.56 million — up 236,000 on the previous three months and just 12,000 shy of the 29.57 million peak of April 2008. This recovery is thanks to the expansion of the private sector, which has added over a million new jobs in the last two years, and now employs 381,000 more people than it did before the crash. Public sector employment, meanwhile, has been cut by 628,000 since the coalition took over, and is now at its lowest level since 2001.

Who said posh youths don't riot? Head down to South Kensington tonight for some Bullingdon-style antics: the nightclub Boujis is inviting loyal regulars to smash the place up before closing time. Guests are invited to leave their mark by scribbling over the walls before literally pulling down the decor - all aided by 'construction girls'. But panic not, Prince Harry! Doors open again at the end of September. All will be fully redecorated and minus the graffiti. In fact Mr Steerpike might have to pop by tonight to see the destruction of the dance floor on which William famously wooed Kate…but strictly in an observational role, of course.

Ministers are generally cautious in welcoming falls in unemployment in case they represent a blip for just one quarter. But Iain Duncan Smith was pretty chipper this morning when the Office for National Statistics announced a fall in the jobless stats for the fifth quarter running and the strongest employment rise since the middle of 2010. In the three months to June 2012, 29 million people were in work, up by 201,000 on the previous quarter. The employment rate rose by 0.4 per cent to 71 per cent, and there are 4,000 fewer unemployed young people.  The number of unemployed people fell by 46,000 to 2.56 million.

Today's headline figures on unemployment are good news: a 65,000 fall in the number of unemployed people to 2.58 million in the three months to May and a 0.2 per cent fall in the unemployment rate to 8.1 per cent of the economically active population. The focus is now growing on the Work Programme to deliver on its promises. Liam Byrne's response to the figures was that they were 'fresh evidence that the beleaguered Work Programme isn't working'. But as Fraser blogged last week, it's rather too early to tell either way, actually. The CBI says that a 6,100 rise in the number of people claiming Jobseekers Allowance, and 441,000 people who have been unemployed for over two years is evidence that the Work Programme must deliver.

The cutting of 17 army units by 2020 was never going to be popular. It is over-dramatic to suggest we now have a self-defence force rather than an army, but the loss of 20,000 regular soldiers will clearly have an effect on the UK’s ability to wage war. And yet the cutting is the easy part. The test for the government (or the next) is how they tackle the consequences. One of these will be large-scale redundancies among ex-soldiers and support staff. Has anyone thought about this? We already know that unemployment and mental health problems are an issue among veterans and that many end up in prison. This is a disgrace.

Hardly a day goes by without more bad news on youth unemployment. The latest figures on NEETs (a horrible de-humanising term for school leavers who are not in education, employment or training) show that the numbers rose between 2010 and 2011 to over eight per cent. The release of these statistics coincided with new polling which showed a near-complete collapse of support for the government among young people. Does this government hate young people? Probably not. Does it belatedly realise it has a massive problem with youth unemployment? Yes it does. The Youth Contract was introduced by Nick Clegg because he and those around him recognised that the Work Programme was not designed to tackle this problem.

At the time of the student protests, I laid out in the Observer the demographic facts that push unscrupulous politicians into picking on the young. Their political vulnerability is the best explanation for the regularity with which the coalition assaults their interests, I said. In democracies, politicians worry about those who vote and a majority of the young do not. Ipsos MORI estimated that only 44% of 18 to 24-year-olds and only 55% of 25 to 30-year-olds voted in the 2010 election. By contrast, 73% of 55 to 64-year-olds and 76% of those aged 65 or over turned out: In the mid-20th century, the customary political apathy of youth did not matter overmuch. Electorates split on class lines.

I know it’s wrong to take John Prescott seriously, but his attack on the government’s work experience programme epitomises a sneering attitude that is quite widespread. It was most egregiously displayed by the BBC Today Programme in its flagship 8.10am report about those who volunteered to steward the Jubilee celebrations — except the BBC report never once used the word ‘volunteer’. There’s going to be a lot more of these work experience offers, thank God, and we can expect the government’s critics to ask if the labour market is ‘receding into the 19th Century’ with ‘Dickensian’ tactics (to use the BBC’s disgraceful language).

Today’s jobs figures show a 105,000 rise in employment and a 45,000 fall in unemployment, from the final quarter of 2011 to the first quarter of 2012. Welcome news, although both figures are within the margin of error, meaning we can’t say with confidence that employment is indeed higher or that unemployment is lower. But even taking the figures at face value, there’s another cause for concern: the rise in employment is coming in part-time, rather than full-time, jobs.

Here are some numbers for you: the adult rate of the national minimum wage will be raised, this October, by 11p to £6.19 an hour, but the separate rates for 16-17 and 18-20 year-olds will be frozen, at £3.68 and £4.98 respectively. I mention this not just because these figures were announced today, but also because it's the first cash freeze in any of the rates that we've seen since 2005 (and even that was when the 16-17 year-old rate was kept at the same level after its very first year of existence): The question is, what now? The government is defending the freeze by saying that, ‘Raising the youth rate would not benefit young people if it meant it was more difficult for them to find a job’ — and rightly so.