Why is the road to full employment lined with food banks | Business

Britain's unemployment rate fell to 3.9% in January, its lowest level in more than 44 years. Is the return to employment levels last seen in the 1970s a sign that the economy is more robust to the Brexit approach than many feared? We asked three prominent economists in the labor market.

What motivates the record employment figures?

Total employment has increased by more than one million over the past two years. Growth was highest among the 50 to 64 age group, with an increase of 682,000 for women and 506,000 for men. According to David Bell, former advisor to the Scottish Parliament on employment and the economy at Stirling University, the additional number of women in employment is probably related to the sharp increase in the age of retirement at 66, equal to that of men.

Steve Machin, director of the Center for Economic Performance at the London School of Economics, said that a growing number of people of retirement age remain in the labor market: the erosion of state pensions . "

The recent dramatic increase in the number of working-age migrants in the United Kingdom is another reason, says John Philpott, former chief economist of the Chartered Institute for Personnel and Development. "We have a record number of jobs mainly because we have more people. Immigration has generally been the main determinant of job growth, while employment protection has been more important in raising the employment rate. Migrant workers increase both employment and population. "

Unemployment falls to 3.9%

Are these jobs of good quality?

The Office for National Statistics (ONS) last week released employment figures for the three months ending in January, indicating that more than 90% of new jobs were full-time. "That does not mean that these are high quality jobs," says Machin. "Many people say that they would like to work more hours if they were available, which strongly suggests underemployment. In addition, many self-employed workers and zero-hour contracts say that they do the work because it is the only job they could get, not because it offered more flexibility. "

Philpott said immigration and welfare policies meant the creation of many "mediocre jobs" alongside full-time, better-paid roles: "the minimum wage has at least increased faster than the average wage" .

Why are salaries increasing?

The Bank of England estimates that the unemployment rate at which wages start to skyrocket is 4%. The United Kingdom has now plunged to 3.9%, which should translate into higher wage increases. This would mean increases greater than 4%, but the peak seems to be the 3.4% reported by the ONS in January.

Bell pointed out that the public sector was limited to a 2.8% increase and that wage growth by industry was mixed: "There were declines in construction and wholesale trade, retail sales, hotels and restaurants. Indeed, this increase is mainly due to financial services and business services, probably to significant premiums at the end of the year in the city. "

Philpott says that wage growth can only be boosted when unemployment drops to 3%. Bell and fellow economist David Blanchflower estimate the figure could be even lower at 2.7%.

What does he say about the state of the economy in general?

Machin is dark. Since the referendum, the UK has fallen sharply in the ranking of OECD countries in terms of revenue generated per hour. This measure reflects a decline in investment that effectively deprives workers of the most modern tools to do their job. Workers in the industries affected by the referendum-induced depreciation of sterling saw wages and training fall. Philpott said: "A record number of jobs is a good thing, but among those of us who have been campaigning against mbad unemployment in the past, few would have wanted to see the road to work. full employment lined with food banks.

Is this good news sustainable?

"Productivity and wage prospects do not look promising," says Machin. "Investments in physical and human capital are in free fall. And this may be amplified further in the case of a Brexit without agreement. "

Philpott adds, "The UK labor market is now so flexible that job losses will only be likely during recessions."