Wednesday, December 16, 2015

The labour market statistics released today present a very rosy picture of the continuing recovery. Unemployment is down sharply, by 110000, to 5.2%. The gains in employment have been spread across various groups - with marked increase in the numbers of full-time employees (up 80000), part-time employees (up 66000) and full-time self-employed workers (up 75000). The largest gains have been in construction (up 77000 over the three months to September), but there have also been large gains in professional, scientific and technical services, and in administrative services.

After a subdued period earlier in the year, vacancies are now once again on the rise. This provides further evidence of a reinvigorated labour market.

On pay, the story remains subdued, however - indeed, increasingly so. Total pay in October averaged just 1.9% higher than a year earlier, this figure being down from 2.1% in September. In construction, however, reflecting the recent rapid expansion of the sector, pay has continued to steam ahead - at a remarkable 6.6%.

The overall picture, then, indicates healthy development. The main question mark surrounds how pay can be nudged up so that workers feel the benefit of recovery. The hike in the minimum wage will, at least in a mechanical way, help, but the real issue remains one of improving productivity.

Thursday, December 03, 2015

Recent debate surrounding the UK's participation in the Syrian conflict has brought to the surface some interesting views about the motives of politicians making key decisions. Some argue that politicians have a vested interest in fostering conflict and hence boosting the defence related industries. 'Follow the money' has become a favourite phrase of the cynics.

Serious literature of relevance to this has produced ambiguous findings, but most reliable estimates range from a negative through a negligible effect of military spending on economic growth. So the view that, as a general rule, a politician might vote for war if standing to benefit from ownership of defence related companies ignores the fact that the same politician would be better off owning a broad portfolio and voting against conflict.

There has doubtless been much wrong about the way in which the West has dealt with the situation in the Middle East. For sure, the web of alliances that has been woven is tangled indeed. But some of the wilder and more cynical views currently doing the rounds belong in the world of conspiracy theories - and as such are much less convincing than cock-up as explanations of what we observe.