Bishop: "I'm afraid you've got a bad egg, Mr Jones"; Curate: "Oh, no, my Lord, I assure you that parts of it are excellent!"
Figures from the Office for National Statistics released this week painted an interesting picture of what is going on in the UK labour market at the moment. It was something of a mixed bag, in truth. On the one hand, there was a welcome rise in the number of people in employment – up by 24,000 when compared to the previous three months and by 432,000 over a year. In addition, job vacancies stood at 516,000 - the highest level since the end of 2008.
On the other hand, there was a rise in the number of people “not in the labour force” – those aged between 16 and 64 either not looking or not available to work – to just under 9m. Put another way, combined with the 2.5m seeking work, some 30% of the 16-64 age bracket are not in employment. Students and those who have taken early retirement will obviously account for some of this, but it is still nevertheless a high number.
In another sign of the changing demographics in the UK, the figure I found most interesting was the number of people over 65 in employment, which exceeded one million for the first time and has almost doubled in the last twenty years. This has several causes. Of course, there are significantly more people in the UK who have entered this esteemed age bracket. Moreover, in general terms, the health of the over 65s is considerably better than, say, twenty years ago. People running marathons in their seventies is not uncommon these days! Changes in employment legislation, too, has meant that a fixed retirement date does not exist in quite the way that it did in the past.
However, another factor is economic necessity. Household incomes have been squeezed and the value of pensions has dropped and, for those relying on savings income from savings accounts, the current ultra low interest rate environment has not been the panacea that it has for borrowers. Annuity rates, based on government bond yields, have fallen to record levels meaning that, for those retiring with a money purchase scheme pension (as opposed to a final salary scheme) are faced with some unenviable choices, one of which is to continue to work.
Rather like the curate’s egg, politicians of every hue can find something to bolster their argument in this report. However, in the economic journey that we are on, the direction of travel still feels positive. We were never likely to go from midnight to midday in one move – indeed we have commented before that any recovery was likely to be a long, draw out affair – but these figures, especially the number of job vacancies, show the economy is moving in the right direction.
Regional Director - London
Regional Director - London