Daily Management Review

Rise in UK Unemployment Rate Raises Eyebrows and Questions


A reduction in the number of people engaged in part time employment drive the unemployment rate of Britain to a two year high. Official data that showed the rate of unemployment up to May confirmed the fact on 15 July.
However the Office for National Statistics of Britain however claimed that the total earnings of employed people in Britain rose in terms of the combined effect of salary and bonus and put the number at a five year high during the same period.
In the three months leading up to June, the number of people in employment got reduced by 76,000, most of them in the part-time work. Among these numbers, 15,000 have become freshly unemployed. The report also stated that 30,000 people were had become inactive and were either unavailable for employment or were not seeking employment but they are not counted in the number of unemployed. The percentage rise was to 5.6 percent from 5.5 percent compared to the last quarter of the last fiscal.
Following the global financial crisis of 2008-2009, Britain’s economy had begun to rise strongly since around 2013. This quarter’s rise in unemployment rate is among the very first hiccups to the rising British economy since 2013 as this is also the first time that the unemployment has raised since 2013.
This rise in unemployment rate is in line with the previously expected slackness of the strong job market in Britain as forecast by economists.
The fact that a section of the employable were not looking for jobs became evident from a survey among employers and recruiters conducted last month that stated that companies were forced to push up entry level salaries and new hires owing to the lack of suitable candidates for the vacancies.
A section of experts claimed that the national election in Britain on May 7 this year could have resulted in the rise in unemployment. The ONS report however did not mention anything about this. However the report does state that the number of people seeking unemployment benefit rose by 7,000 in June this year when compared to earlier months. This, according to some experts, could have links with the national election geld in May. This was also the first time since October 2012 that there has been a rise in the unemployment benefit claims.
However even with the annual rise of 3.2 percent n salary and bonus over the last fiscal year the latest rise in unemployment, according to economists, is an indication that the British economy is reaching its full capacity.
ONS statistics also corroborate the fact that the productivity of the labour market of Britain has been stagnant.  Labor productivity is the measure of measures how much employees produce for each hour of work. The figure was 17 percent below average of the Group of Seven leading nations in 2013. This figure had not managed to grow even as the economy kicked back to growth phase since 2013.
Wednesday’s figures could compel the Bank of England to tighten its monetary policy and in case the productivity does not increase while here is constant increase in the wage. The salary increase in the first quarter touched 2.8 percent, excluding bonus pays, the highest in the last six years.
(Source: http://uk.reuters.com)

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