News

February 21, 2014

Osborne advises caution despite unemployment fall

Positive news that UK unemployment has fallen to 7.2% this week has been met with calls for caution by chancellor George Osborne and UK business groups.

The Office for National Statistics (ONS) announced that the number of people out of work fell by 125,000 to 2.34 million in the three months to December.

However, in a speech to business leaders in Hong Kong this week, George Osborne said: "As well as reasons to be cheerful, there are also reasons to be careful. The recovery is not yet secure and our economy is still too unbalanced. We cannot rely on consumers alone for our economic growth, as we did in previous decades."

His comments came as new research by the online freelancer marketplace, PeoplePerHour, shows that retail is the dominant employment sector in the UK. It found that 2.7 million people are now working in retail, making it the UK's biggest employer by far. Of these, almost a million work in the big four supermarkets alone.

The research reveals the complex picture behind the headline employment statistics – with rising numbers of self-employed people and many still in part-time work.

Xenios Thrasyvoulou of PeoplePerHour said: "What is clear is that the reliance on part-time work is not abating. Self-employment also remains high; what began as a trickle of people working for themselves has turned into a tide. As we enter a recovery period, the number of self-employed people continues to grow."

Now business groups are warning that the rise in employment could be about to slow down.

David Kern, chief economist at the British Chambers of Commerce (BCC), said: "There are signs that the pace of improvement in the jobs market is slowing down. Although youth unemployment has fallen, the jobless level among 16-24 years olds still stands at 917,000, which is far too high. Many people are also still working part-time, as they are unable to gain full-time employment."

And the latest quarterly benchmark survey of employers from the Chartered Institute of Personnel and Development (CIPD) – Labour Market Outlook – suggests that a "productivity hangover" is affecting UK employers who have maintained and increased employment over a period of falling output.

Gerwyn Davies, CIPD labour market adviser, said: "Employment growth, normally a lagging indicator of recovery, seems to have preceded the stronger signs of growth we're now seeing."

However, the survey also shows that small firms are far more positive about recruiting than larger businesses. Davies said: "It is critical that we ensure these growing firms buck the UK's enduring weak productivity trend."

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• Could the recovery be bad for your business? ARTICLE