Irish Economy
UK, Ireland talk up full employment; Focus on quantity not quality - Part 1
By Michael Hennigan, Finfacts founder and editor
Jan 26, 2015 - 9:09 AM

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Enda Kenny (r) at World Economic Forum, Davos, Switzerland, Jan 22, 2015.

The UK’s economy has moved towards low-skilled jobs and less towards high-skilled ones compared with other European countries, according to Oxford university research. The number of double-jobbers in the economy has also grown and while politicians brag about headline numbers in the UK and Ireland, there is rising insecurity and hours available.

Last Monday, David Cameron, British prime minister, promised “full employment” in the UK if the Tories win the next election. He set a target of ensuring that “anyone who wants a job is able to get a job in our country.”

In Ireland in the previous week, Enda Kenny, taoiseach, set a full employment target for 2018 with all jobs lost in the recession restored. As we reported last week, the Government had to fiddle the data to meet that goal.

Last week the UK Office for National Statistics (ONS) reported that 5.8% of the working population are without a job. In the three months to November, the number of unemployed fell to 1.91m – a million fewer than five years ago.  At the same time average earnings rose 1.8% over the past 12 months, overtaking the inflation rate by 0.5% after years of falling average real wages.

Last year the Treasury calculated that its "tax-gap" for 2013 - the difference between the amount of tax it should collect in theory and actual receipts - rose to £34bn, the highest level for over eight years. This mainly reflected income tax receipts being below levels that were expected based on jobs growth.

Michael Saunders and Ann O'Kelly, Citigroup analysts, found that almost all the employment growth over the past year was in sectors which pay at least 20% below the national average. Meanwhile, more than half the new jobs created since 2010 have been among the self-employed, while the proportion of self-employed people who earn sufficient income to pay tax has fallen from 80% to 65 per since 2008. Wage growth as we suggested has only risen in real terms in recent times.

  • Of the rise in UK employment of 1.3m between early 2008 and November 2014, 220,00 full time employee jobs were added; 400,000 part-time employee positions and almost 700,000 in self-employment;
  • In Ireland last September, 124,000 part-time workers were seeking full-time work - 6% of the total workforce;
  • In Ireland there were 76,000 in government activation programmes in September 2014 and the number in UK government supported training & employment programmes was at 112,000 in November 2014;
  • Deutsche Bank economists say that since 2011, the marked increase in employment has been solely attributable to an expansion of regular employment, i.e. permanent full-time jobs with social insurance obligations;
  • Irish full-time employee numbers grew by 14,000 in the 12 months to the third quarter of 2014 and remain 258,000 below the Q2 2008 level;
  • Compared with Q1 2008 and Q3 2014:
  • There is a loss of 233,000 full-time employee jobs;

    Self-employed owners with employees are down 35,000;

    Self-employed 1 person operations and Assisting Relative are down 10.0;

    Part-time work is up 49,000.

  • Average hourly total labour costs (pay + costs such as PRSI and pensions) fell by 1.9% over the four years to Q3 2014 from €24.72 to €24.26 per hour.

Irish ministers of course will not highlight the importance of full-time employee positions that would support a mortgage - while a poor job is usually better than being unemployed, it's important to consider this issue in relation to the touted full-employment target - see link above.

The Financial Times reports today that the UK is becoming a nation of grafters. "With living standards at their lowest in a decade and real-term wages falling 8% since the financial crisis, more people are cramming extra work into evenings, weekends and even their lunch hours to supplement their main incomes.

Officially, the average number of hours Britons work each week has increased from 31.4 to 32.2 since 2011 after years of decline. There are now about 1.2m with two jobs, up from about 1.05m in 2007. The number of workers combining their main job with a second self-employed role has increased 40 per cent since 2006 to 450,000."

The ONS said last week that n 2014, just under 1 in 10, or 3.0m people of 30.8m employed in the UK, wanted to work more hours than they are currently employed to do and are therefore classified as underemployed.

On average each underemployed worker would like to work an extra 11.3 hours per week. In the UK in 2014, just under 1 in 10 workers in the UK would like to work fewer hours for less pay, and are therefore classified as overemployed while 13.9% of workers in Professional Occupations were overemployed.

In 2014, over 1 in 5 part time workers were underemployed compared with around 1 in 20 of full time workers.

UK productivity falls; Ireland's apprenticeship system remains a shambles - Part 2

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