UK Unemployment in 2007 lowest for 22 years

Amidst all the gloom surrounding global credit markets and house prices, it is easy to forget some of the strengths and developments in the UK economy.

uk-unemployment-

One of the most remarkable features of the UK economy is the sustained reduction in unemployment. Falling from a peak of 3 million in 1992, the official method of unemployment is now only 813,000 – a level not seen since April 1975.

Despite the fall in unemployment wage settlements remain fairly muted, with average pay claims being settled a little above 4%.

However, if unemployment continues to fall labour shortages may push up wages and therefore prices. This would make it more difficult to cut interest rates in 2008

The continued fall in unemployment is mainly due to:

  • Long Period of Economic Expansion – economic growth close to long run trend rate of 2.5%. UK has avoided boom and bust economic cycles.
  • Fall in structural unemployment. e.g. economic regeneration of formerly depressed areas like the north east and South Wales. Note: at the height of the Lawson boom in the 1980s unemployment was still over 1.5 million. – a legacy of structural unemployment in certain regions.
  • Greater difficulty in getting unemployment benefits. E.g. people under 18 are not eligible for benefits because they should be on training schemes.

In this post, I suggested that the UK is underestimating its true level of unemployment

Nevertheless, unemployment is significantly lower than it has been for a long time.

Update since 2007

The 2008/09 recession caused sharp rise in unemployment, but after 2012 unemployment fell quite rapidly – much faster than after previous recessions. By late 2017, Unemployment stands at approx 4.5% – the lowest level since the 1970s.

However, this fall in unemployment also reflects changes in the nature of the labour markets

  • More flexible labour markets
  • Rise in under-employment
  • Growth of gig economy – temporary contracts.
  • Real wages stagnant in past 10 years.

The fall in unemployment is very welcome, but there has been a rise in job insecurity and low-paid work.

By on December 12th, 2007

2 thoughts on “UK Unemployment in 2007 lowest for 22 years

  1. As someone who is uneployed I am starting the think that the low levels of unemployment are a contrived myth. I was in a high demand area of IT and was made redundant 2 years ago, since then I have applied for maybe 80 jobs in the same field with no luck. What I have found is that employers are now more choosy about who they employ than at any time in the last 30 years. They can demand any skill set to the letter, any age group, degree, anything they want and the reason is this, they can choose candidates from anywhere in the world. As a Londoner I have been competing with the whole of the UK, all of Europe, Australia, S.Afrrica, India and many African nationalities. This of course does not work the other way around. This also puts employers in a position to delete their responsibility for any training and development of their employees, just discard the old used one and get the new updated one in the world wide employment market. As for retraining, assistance with jobfinding, if you havent got big money, forget it, there is nothing there, and the government via their jobcentres, for all their talk, takes no interest whatsoever.

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