Number of unemployed young people still rising despite overall fall

“The labour market statistics released today continue to present a picture of a recovery. The unemployment rate is down to 5.7%, with a substantial gain in numbers of full-time employees (some 135000). Numbers in full-time self-employment have fallen by 53000 over the quarter. This gradual move from self-employment to employment is indicative of an easing of the conditions of insecurity that have characterised the labour market in recent years. Nevertheless, there has also been a substantial increase over the quarter in the numbers of part-time self-employed workers (some 33000).

“While unemployment overall fell by a total of 97000 over the quarter, young people appear not to have benefitted from this at all. Indeed, unemployment amongst under-25s rose slightly over the period. There remains an acute need to target support at this group of workers. As we have reported recently, the young are also particularly prone to underemployment.

“Some of the most eagerly awaited data in this release concern pay - and the data do not disappoint, at least in terms of how interesting they are. Average weekly earnings over the year to December rose by some 2.4%. With price inflation hitting an all-time low, this would appear to represent a welcome and much delayed boost to people's purchasing power.

“However, this average figure conceals a great deal of variation, and much of the gain is due to the effect of bonuses. Indeed, excluding bonuses, the rate of growth of average weekly earnings actually fell in December - to 1.6% (from 1.7% in November). Bonuses are heavily concentrated in the financial services sector, of course - and in that sector, the rate of growth of bonus pay recorded in December amounted to a massive 22.2%. The overall picture on nominal earnings thus remains fairly subdued, and does not indicate any significant squeeze on spare capacity in the labour market just yet.”