Unemployment falls again to 2.5m (or 7.8%)

Generali

Graham_Devon wrote: »

There was a "mini investigation" into the job figures on the radio as I was driving home last night.

Everyone can have their say and get their point across at the moment, whether they want to suggest it's good, mediocre, or bad. One thing that is agreed upon is that most people are perplexed as to how productivity is falling, job losses are increasing, yet unemployment keeps falling.

There appears to be several reasons for the unemployed falling.

1. Part time jobs allowing 2 people to be employed compared to one full time job. Employers are keen to offer part time working apparently, as it doesn't cost them as much in NI? Not sure, but this has been a trend since tax credits were introduced. In some cases, 1 full time job is being split into 3 part time jobs, emplying 3 people compared to one.

2. Workfare. Apparently this IS having an impact to the unemployed numbers as anyone currently undergoing workfare is removed form the figures. I didn't believe this, but apparently it's true. Dunno how they came up with that blinder.

3. More and more people are becoming self employed, and 3 reasons were sighted for this. One reason was lack of work, so they become freelance and work for agencies. The second was employers switching employees to self employed, and again, using agencies. The third was the job centre advising unemployed people to become self employed for a variety of reasons, but the main one was, if you fit the requirements, you get more in tax credits than you would on the dole / income support. They expect around 300,000 to quit self employment around August when universal credit comes in. Theres a scandal if ever there was one.

4. The recent increase in education mandatory ages has removed loads of people from potential unemployment and kept them in education. This will hit September this year as the mandatory age increase falls out of the system.

FTAlphaville and others have been doing some good work on this which I'm trying to distill.

Basically it might be that changes in investment aren't flowing through into GDP or perhaps because more output doesn't get measured as part of GDP.

As an example, think about Facebook. There is a huge amount of output on Facebook that is almost entirely unmeasured by GDP figures. Now admittedly it's not very useful output but people like it and it's probably more useful socially than getting drunk which is measured as a part of GDP!

grizzly1911

Graham_Devon wrote: »

1. Part time jobs allowing 2 people to be employed compared to one full time job. Employers are keen to offer part time working apparently, as it doesn't cost them as much in NI? Not sure, but this has been a trend since tax credits were introduced. In some cases, 1 full time job is being split into 3 part time jobs, emplying 3 people compared to one.

.

Stand to be corrected but if you are minimum wage and only do 16 hours no NI is payable?

So government get hit twice, no NI collected and tax credits paid out.

wotsthat

Generali wrote: »

Basically it might be that changes in investment aren't flowing through into GDP or perhaps because more output doesn't get measured as part of GDP.

As an example, think about Facebook. There is a huge amount of output on Facebook that is almost entirely unmeasured by GDP figures. Now admittedly it's not very useful output but people like it and it's probably more useful socially than getting drunk which is measured as a part of GDP!

That's interesting. Most people (me included) when trying to explain why both output and unemployment are falling only look at the unemployment side of the ratio for 'faults'.

Sounds quite difficult to measure so I can't see GDP being dethroned as the standard measure of output though.

Graham_Devon

grizzly1911 wrote: »

Stand to be corrected but if you are minimum wage and only do 16 hours no NI is payable?

So government get hit twice, no NI collected and tax credits paid out.

This was regarding the employer NI.

Not something I know anything about to be honest. Do they have to pay NI even if the empoyee doesn't?

grizzly1911

Graham_Devon wrote: »

This was regarding the employer NI.

Not something I know anything about to be honest. Do they have to pay NI even if the empoyee doesn't?

AIUI around £144 per week before employer contributions start.

Example: Adrian earns £1,100 in June 2013. He is paid monthly. The first £646 per month he earns is free of National Insurance. Employee’s National Insurance is deducted from his earning over this limit at 12%, this comes to £42.48. In addition, the employer will have to pay employer’s National Insurance on Adrian’s earnings over £641 per month charged at 13.8%, that is £49.54.

http://taxaid.org.uk/info/national-insurance/national-insurance-for-employees-and-employers

Graham_Devon

grizzly1911 wrote: »

AIUI around £144 per week before employer contributions start.

Example: Adrian earns £1,100 in June 2013. He is paid monthly. The first £646 per month he earns is free of National Insurance. Employee’s National Insurance is deducted from his earning over this limit at 12%, this comes to £42.48. In addition, the employer will have to pay employer’s National Insurance on Adrian’s earnings over £641 per month charged at 13.8%, that is £49.54.

http://taxaid.org.uk/info/national-insurance/national-insurance-for-employees-and-employers

Well that makes sense then. Can see the attraction in keeping part time staff earning less than that.

Thrugelmir

grizzly1911 wrote: »

GDP/Productivity falling apparently so what are all these new employed people doing?

If self employed for example will miss the official ONS statistics.

So possibly the economy is improving albeit slowly. As people earn a living as best they can.

All part of rebalancing away from the dependence on the public sector for job creation.

geoffky

http://www.mindfulmoney.co.uk/wp/shaun-richards/why-if-the-uk-employment-situation-is-so-good-is-the-bank-of-england-panicking/

grizzly1911

geoffky wrote: »

http://www.mindfulmoney.co.uk/wp/shaun-richards/why-if-the-uk-employment-situation-is-so-good-is-the-bank-of-england-panicking/

Thanks for that. Interesting Article

I noticed they pinched my lines, from a week or so back, in their summary.:cool:

Perhaps it would be good if they would both fess up and say

Does anyone know the way, did we hear someone say
(We just haven't got a clue what to do)
Does anyone know the way, there's got to be a way
To Blockbuster

ah they've shut.

https://forums.moneysavingexpert.com/discussion/4432043

Generali

wotsthat wrote: »

That's interesting. Most people (me included) when trying to explain why both output and unemployment are falling only look at the unemployment side of the ratio for 'faults'.

Sounds quite difficult to measure so I can't see GDP being dethroned as the standard measure of output though.

Part of it apparently is to do with the way that accountants deal with investment. Intangibles get written down straight away and so aren't included in GDP figures (happy to be correct as I'm not an accountant). Much IT investment is accounted as an intangible so it's possible that output isn't falling at all, it's just that the measure of it is.