Part-timers mask fall in number of traditional jobs

A record increase in the number of part-time workers is masking a sharp fall in the number of traditional full-time workers, official figures showed yesterday.

The number in work rose 101,000 in the three months to May to a new record of 27.91 million people, while unemployment fell to a two-year low of 5 per cent, the Office for National Statistics said.

But a detailed breakdown showed the growth was entirely driven by a rise in part-time work, self-employment and by workers aged over 50.

The trend, which was highlighted in The Independent three months ago, is starting to alarm economists. John Butler, UK economist for HSBC, said: "The change in mix in terms of type and age and employment suggests that a vulnerability exists. Although the aggregate numbers point to a labour market which is undoubtedly strong, the underlying picture is less robust."

There was a staggering increase of 102,000 part-time jobs over the latest quarter, taking the total to 7.22 million - the highest since records began in 1984.

In contrast, the number of full-time posts dropped by 1,000. Over the last year the stock of full-time employees has slumped by 45,000 while part-time jobs have swelled by more than 115,000. Self-employment has surged by more than 100,000.

Meanwhile, nine out of 10 jobs created in the UK over the past year - a total of 230,000 posts - have been filled by employees aged over 50. In contrast 176,000 people in the key high spending and borrowing 24-to-35 age bracket have lost their jobs over the past year. "The people with the highest debt and highest propensity to spend are the ones being driven out of the labour market," Mr Butler said.

The influx of older people into the job market could be a reflection of mounting worry about shortfalls on pensions and endowment investments.

While economists admitted to being baffled by the trend, many said it undermined the superficial strength of the labour market.

Simon Rubinsohn, the chief economist for London stockbrokers Gerrard, said: "Because so few full-time jobs are being created, the headline employment numbers exaggerate the demand for labour."

However, he said falling unemployment meant a savage shake-out in the labour market was unlikely.

George Buckley, UK economist at Deutsche Bank, agreed, saying: "Consumption and the housing market will suffer but an outright crash should be prevented."

On a sectoral basis the combined 146,000 job losses in manufacturing and business and financial services over the past year were offset by a 157,000 increase in public sector employment.

The claimant count measure of unemployment, which only includes people drawing benefits, rose 1,700 in June to 952,000, or 3.1 per cent of the workforce. It was the fifth successive rise, taking the total to 19,600 although it is still close to 28-year lows. Growth in average earnings picked up to 3.4 per cent in May from 3.2 per cent in April.