Jobless rate divides expert opinion
Wednesday 17 December 1997
Unemployment below the current rate of 7.1 per cent would be unsustainable, even though the threshold below which falls in joblessness trigger inflation has fallen in the past decade. The evidence for this claim, in a report published today by the Employment Policy Institute, will disappoint those who have argued that deregulation and flexibility in the jobs market have significantly reduced the "structural" unemployment rate.
With figures due today likely to show both the headline rate and the more reliable survey-based measure of unemployment still falling, the optimists will point to the fact that pay rises have remained low despite the tight jobs market. Economists expect average earnings growth to have picked up slightly, but it will remain at around 4.5 per cent despite the fact that unemployment has fallen to its lowest for 17 years.
The authors of the new report, Ray Barrell and Rebecca Riley of the National Institute of Economic and Social Research, say this is due mainly to the effect of the strong pound in keeping pay and price rises low. This, rather than a fundamental change in the structure of the jobs market, accounts for the surprisingly subdued wage growth, they say.
This is not to say that the sustainable unemployment rate has not fallen at all. Looking at long-term flows into and out of unemployment, the paper puts it at around 7 per cent now compared to 8-9 per cent during the 1980s.
The improvement is due mainly to an increase in the size of the skilled workforce since the late 1980s. The effort to get more young people into higher education has significantly increased the number of graduates entering the workforce - a conclusion that will cheer the present Government, which is also emphasising the importance of education and training.
- 1 Malaysia Airlines MH17 crash: Pro-Russian rebel 'admits to shooting down plane'
- 3 Israel-Gaza conflict: The myth of Hamas’s human shields
- 5 Dutch paedophile club to fight their ban at the European Court of Human Rights
Malaysia Airlines MH17 crash: Vladimir Putin is given 'one last chance' to end hostilities in Ukraine
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
The truth about conspiracy theories is that some require considering
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
Malaysia Airlines MH17 crash: victims’ bodies bundled in black bags and loaded onto trains
iJobs Money & Business
£350 - £400 per day: Orgtel: PMO Analyst - Banking - London - £350 -£400 per d...
£300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...
£35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...
£475 - £525 per day: Orgtel: Test Lead, London, Investment Banking, Technical ...