The Department of Employment's official survey of employers suggests that jobs are still being shed, despite strong economic recovery. But the official Labour Force Survey - which asks individuals whether they have a job - shows that employment is rising.
Michael Portillo, Secretary of State for Employment, said the jobs being created might be 'the sort of work employers don't care to declare'. This implies that employers may be taking on people for low wages and short hours so they do not have to pay National Insurance contributions. Workers may also be employed on a casual basis, in which case they may not have tax deducted automatically under Pay As You Earn (PAYE).
Mr Portillo said it was better for people to have low-paid, part-time jobs than no job at all. By gaining experience in these jobs people would have a better chance of getting full-time work.
The number of people unemployed and claiming benefit dropped by 34,200 in August, after taking account of the normal rise for the time of year. The jobless total now stands at 2,595,900, the lowest for more than two and a half years, according to figures released yesterday by the Employment Department.
Fewer people joined the dole queue in August than in any month for nearly four years, while the number of people leaving the queue picked up slightly.
'The labour market data suggest that economic growth remains buoyant,' said Michael Saunders of Salomon Brothers. But he added that the fall in the jobless total probably understated the gain in employment.
Simon Briscoe of Warburg Securities said there was no guarantee that the fall in unemployment would continue, especially as the average working week was shorter than at any time during the recession.
The fall in the jobless total was larger in August than in June and July combined and brought to an end a four-month period in which the fall in unemployment had been slowing. Unemployment fell for both men and women and in all parts of the country. The biggest drops were in the South-east and South-west, leaving 9.2 per cent of the workforce unemployed in the country as a whole.
The Employment Department's quarterly survey of companies showed that 51,000 jobs were shed between March and June, although self-employment rose by 41,000. The Labour Force Survey paints a different picture, with the number of employees rising by 80,000 between February and May. It shows that full-time employment rose among men, outweighed by lower female full-time employment. Part-time employment rose for men and women.
The uncertainty about the true trend in employment cast doubt on the upbeat figures for productivity and unit wage costs, because both are based on the measure of employment derived from surveying companies. Productivity - factory output per worker - in the three months to July was 4.8 per cent higher than in the same three months a year earlier, the biggest increase for a year.
Unit wage costs - the amount spent on wages and salaries to produce each unit of factory output - were 0.5 per cent down on a year earlier in the same period. This is an important measure of pressure on companies' costs. This influences the prices they are likely to try to charge and therefore the rate of inflation.Reuse content