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BBC News
2 days ago
- Business
- BBC News
Why employment figures aren't up to the job
Unemployment in Scotland is down, while it has risen in the rest of the monthly figures on the jobs market tell us the share of the adult population in Scotland searching for a job between March and May was down to 3.7%, while it was up to 4.7% across the UKThat seems like good news for the Scottish economy. But can these figures be trusted? According to the people who compile them no, they can't, and be careful how you use margin of error for the Scottish figure is 0.7 percentage points either way, so unemployment could be 3% or 4.4%. And while there's a smaller margin on the UK figure, it means that the Scottish figure could be higher than the UK one, but probably isn't. Such numbers are no longer given the stamp of approval as National Statistics. Why? I'll come back to let's look at some numbers that are more reliable. They come from HM Revenue and Customs which - as many of us know - takes tax off employed people's pay at source in the month it is collection agency knows the number of people on payrolls, how that number varies, and how median pay for employees is changing. They can do that at a Scottish level as well the UK and other bits of the Scotland, that tells us there were more than 2.5 million people in payrolled jobs in June. And since June of last year there's been a fall in that total of 16,000. With more data due, they'll revise that figure next reliable way of counting captures only one element of the number of people seeking work in any month - the claimant count of those seeking benefits due to unemployment. Lots of people who are unemployed do not claim or don't qualify for claimant count hasn't changed much over the past three years. The newly-published figure is 107,200 claimants in Scotland last month - up 1,800 on the previous month, and down 1,300 on June last year. How has pay been affected? According to HMRC, median employee pay in the month to June was up 5.4% and earning £2,546. (A reminder: if all employees were lined up, the median would be the person in the middle.)Across the UK, that figure rose faster, at 5.6%. And when you take inflation into account - at 3.6% we learned this week - real earnings rose by 1.8%.That does not include self-employed workers. There are very poor stats on them until a long time later because they don't declare their income, or even if they've been working, until several months after the end of the financial year. Earnings this month have to be declared by the end of January 2027. The figures filed in January this year were for earnings up to 20 months other measure of earnings from the ONS is from a survey of British workers taken between March and May, including the self-employed but not including Northern Ireland (for reasons I haven't yet discovered).That increase in average monthly earnings was 5% in cash terms. That's down from 5.3% in the previous three months, December to February. And if you exclude bonuses, it's the lowest rate of increased earnings for nearly three years, reflecting the fall also in price you're in the public sector, average monthly earnings were up 5.5% in the year to spring, in the private sector it was 4.9%. The real increase, after accounting for price inflation up to those spring months, was again 1.8%. But if you include housing costs, only a 1% real boost to your spending power. This takes us back into the murky statistics of the Labour Force Survey. It's carried out throughout the year by the ONS. It used to be reliable and statistically sound, but since the pandemic, things have gone badly wrong with partly because survey response rates from the public have fallen sharply. It seems we're not as willing to engage with people asking us questions about our working lives and our earnings, particularly younger also because the ONS embarked on a change in the way it gathers information, moving from face-to-face-interviews to online questionnaires. It planned that transition badly, and the stats that it gathered ceased to be ONS claims things are turning around. They're getting more people in the survey, down from 84,000 every three months to 44,000 when, to quote an ONS source, things were "truly awful". That's risen to nearly 70,000 people it's getting better, but still not certificated as sound. And don't bother comparing the most recent survey figures for March to May with last year, or the year if you dig into these figures, you'll find that big range of possible outcomes. For instance, the estimated increase in the number of Scots in employment in March to May was plus 22,000, but that could be wrong, by plus or minus 74,000. So there's a reasonable chance that the number it matter? Yes, because in making policy and distributing funds, those in government need to have the best information about the economy. What about people who can't work because of ill-health? The Bank of England's chief economist complained to the ONS about the difficulty of setting interest rates when the employment figures cannot be take the concern about the number of people who are not available for work, and classified as economically inactive. They're a big focus of government benefits bill for people who are economically inactive due to long-term illness has been rising very steeply. The government came badly unstuck when it sought to cut entitlement to that welfare benefit, and was forced into a do they know how many people are not able to work because of ill-health, or would like to work if they got more help, or have no intention of working? They look to the ONS UK-wide figures are more reliable, because there's a much bigger sample. But even with the increased sample, the margin for error when taking only parts of the UK can leave much uncertainty. Within the Scottish cohort in the most recent numbers, the number of economically inactive people is estimated to be 756,000, but that could be out in either direction by up to 68, ONS has done a full reversal of the move to online questionnaires, at least for the meantime. It plans a long-term shift back to using online questionnaires, while avoiding the mistakes made in the past few years. For now, the survey is based on face-to-face interviews for the first encounter and five follow-up phone calls and online questionnaires with the same people in each of the next five quarters. Change is coming There have been other foul-ups in collecting the stats, including a hiatus in producer prices. In clearing up the mess at ONS, the boss went quietly in May, citing health reasons. Sir Ian Diamond was previously principal of Aberdeen University, where his pay-off was the subject of national independent inquiry into the ONS was set up in April and reported last month, referring to big problems with the management style on Sir Ian's watch, where people were unable to challenge the workload of reform while continuing round-the-calendar workload was unrealistic, bosses did not want to hear unwelcome news, the inquiry found it unsurprising that senior people were leaving, and the quality of output was declining. Last week, ONS chair Sir Robert Chote quit his post, after being told by the government that new leadership was needed, along with integrity in the there are changes being made to the way the ONS is run, with a recommendation from the inquiry report that an experienced change manager is brought in, while someone else leads on the crunching of numbers.
ABC News
3 days ago
- Business
- ABC News
Thursday Finance with Ian Verender
Unemployment figures out today suggest a weakening jobs market and consequently, the Aussie Dollar continued its retreat. Ian Verender has the details.
Telegraph
6 days ago
- Business
- Telegraph
Reeves's deputy dismisses Bank of England's job market fears
The Treasury has dismissed Andrew Bailey's warnings that Rachel Reeves's £25bn National Insurance (NI) raid is hitting Britain's jobs market. Darren Jones, the chief secretary to the Treasury, insisted that 'hundreds of thousands of new jobs' have been created, despite the Governor of the Bank of England raising concerns that the tax changes were damaging hiring and hitting pay packets. Mr Jones claimed that National Insurance contributions (NICs), paid by bosses on their employees' pay packets, protect workers rather than harming their wages and their job prospects. 'There have been hundreds of thousands of new jobs created across the economy and we, in the first quarter of the year, were the fastest growing economy in the G7,' Mr Jones said in an interview on BBC Radio 4's Today Programme. 'We are doing everything we can to create the conditions for business to be profitable and to be able to grow, of course we had to take that particular tax decision in the Budget last year because our commitment was to protect working people in their pay slips.' He was speaking after Mr Bailey warned companies were 'adjusting employment and hours, and also having pay rises that are possibly less than they would have been if the NICs change hadn't happened'. 'I think we're getting more consistently the story that [businesses], if you take the National Insurance change, are adjusting via the labour market. I don't think we're getting to a tipping point in the sense that it's becoming a sort of flood,' he said in an interview with The Times. Softening labour market It is not the first time the Governor has raised concerns over the impact of the tax. Last month, Mr Bailey told the House of Lords: 'We are starting to see softening of the labour market and that's the message I get when I go around the country talking to firms. 'I am hearing more firms telling me they are making adjustments on both of the labour market sides, so both quantities and prices.' Regular wages in the private sector in April grew by 5.1pc on the year, according to the Office for National Statistics, the slowest pace since February 2022. Tax data indicates there were 30.2m payrolled employees in May, down by 0.9pc, or 274,000, compared with the same month of 2024. Even as the number of people employed in health and social work increased by 62,000 on the year, jobs in accommodation and food services plunged by 124,000. The ONS found 736,000 job vacancies advertised in May, down from the post-lockdown peak of 1.3m two years earlier, and the lowest number since the depths of Covid in 2021.
Yahoo
6 days ago
- Business
- Yahoo
Andrew Bailey calls for lower interest rates if job market stalls
The Governor of the Bank of England has called for more dramatic cuts to interest rates if the jobs market sees a substantial slowdown. In an interview with The Times, Andrew Bailey insisted: 'I really do believe the path is downward' for rates. He said that businesses are 'adjusting employment' following Rachel Reeves' tax hikes for businesses, particularly in the increases to employers' national insurance contributions (NICs). Interest rates currently sit at 4.25 per cent, having been held in June to 'squeeze out persistent inflationary pressures' from geopolitical and trade uncertainties. Inflation looks likely to exceed 3.4 per cent when official figures are revealed this week, but Bailey argued that sluggish growth could provide 'slack' that could ultimately bring down inflation. Bailey said: 'If we saw the slack opening up much more quickly, that would lead us to a different conclusion.' The intervention comes as permanent staff positions in London fell at the sharpest rate in 22 months. Recruitment and Employment Confederation (REC) chief Neil Carberry has argued that much of the hesitation around hiring 'stems from the scar tissue left by the Spring tax hikes', as October Budget measures came into effect. In the interview, Bailey touched on growing concerns around the tax burden on businesses and employers. He said: 'I think we're getting more consistently the story that [businesses], if you take the national insurance change, are adjusting via the labour market. I don't think we're getting to a tipping point in the sense that it's becoming a sort of flood.' 'I think the path [for interest rates] is down. I really do believe the path is downward but we continue to use the words 'gradual and careful' because … some people say to me, 'Why are you cutting when inflation's above target?'' Mel Stride, the shadow chancellor, told The Times: 'Labour's reckless £25 billion national insurance hike is more than a tax on work — it's a direct attack on aspiration, ambition and enterprise. Taxing businesses won't grow the economy — it will do the exact opposite.' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Guardian
6 days ago
- Business
- The Guardian
Pound hits three-week low after Bank of England says slowing jobs market could prompt rate cut
Update: Date: 2025-07-14T05:45:11.000Z Title: Introduction: Bank of England could cut rates if jobs market slows, governor says Content: Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. The pound has dropped to a three-week low this morning, after the governor of the Bank of England said it could make larger cuts to interest rates if the jobs market slows quickly. Andrew Bailey told The Times that 'slack' was opening up in the UK economy, following the increase to employers' national insurance contributions. That slack should create downward pressure on inflation. Bailey insisted: 'I really do believe the path is downward' for interest rates. Bank rate is currently 4.25%, following four quarter-point cuts in the last year, with the Bank next scheduled to set rates on 7 August, Bailey added: 'If we saw the slack opening up much more quickly, that would lead us to a different conclusion.' 'I think the path [for interest rates] is down. I really do believe the path is downward but we continue to use the words 'gradual and careful' because … some people say to me, 'Why are you cutting when inflation's above target?'' Governor Bailey also pointed to Rachel Reeves's decision to hike taxes on employers, saying companies were: 'adjusting employment and hours and also having pay rises that are possibly less than they would have been if the NICs change hadn't happened'. Last week, the Guardian revealed that the National Trust is to cut at least 550 jobs in efforts to save £26m after changes made in Reeves's debut budget pushed up labour costs. Hospitality firms have repeatedly warned that higher NICS will force them to cut jobs. And indeed, new data this morning shows that the number of people hunting for jobs has surged at the fastest rate since the height of the Covid pandemic. Following Bailey's rate cut hint, the pound has dropped by 0.2% this morning to $1.3467. That's its lowest level since 23 June, three weeks ago, extending its recent losses.
