France and Flexible Employment
This article could be useful as an illustration of the EU context in relation to employment in general, and flexible employment in particular. Attracting inward FDI is arguably a significant benefit of UK membership of the EU, and one of the advantages which the UK can offer compared to, say, France is relatively flexible employment laws.
read more...»Unit 2 Macro: Living below the Breadline
This article on the appalling depth of workless households in Liverpool is a reminder of the multiple aspects of relative poverty and economic/social exclusion.
The causes of unemployment are complex - many are structural - but it is hard to draw much if any optimism from reading this article. By some estimates over one third of households in Liverpool have no one in work and second and third generation unemployment is not uncommon. This is a must article for students to read if they want a better awareness of the human cost of non-employment. Read: Below the breadline on Liverpool’s workless estates
read more...»Unit1 Micro: Can a minimum wage create jobs?
Tim Harford has a piece in his regular column in the Financial Times which discusses some of the issues surrounding the minimum wage and whether a legal pay floor can actually create jobs. Here is the link
Unit 4 Macro: Video Resources on Unemployment
This blog entry brings together a selection of recent news reports and videos covering the economics of unemployment in the UK and inother countries.
read more...»Unit 4 Macro: Human Capital and Economic Growth
In A2 macroeconomics the underlying causes of economic growth and development and constraints on both of these are covered in more depth. One of the concepts students might be familiar with is that of human capital.
I have always summarised the idea of human capital as being a measure of the overall quality of the human input available to produce goods and services in an economy. The ONS have published a new study on the value of human capital in the UK and they draw on a definition given by the OECD
read more...»Unit 4 Macro: The Rise in Self Employment
One feature of the jobs market data in the UK in the last couple of years has been the surge in measured levels of self-employment (the data is collected as part of the huge Labour Force Survey)
The total number of self-employed people in the UK increased by 166,000 in the three months to the end of November to reach 4.14 million - this is the highest number of self-employed people since comparable records began in 1992.
What helps to explain the growth of self employment? Optimists might claim that it is a sign of a pick up in entrepreneurial activity in Britain as many people who have been made redundant decide to strike out on their own by starting a new business.
A more realistic explanation is that rising self employment is a sign of macroeconomic weakness. Hundreds of thousands of people have lost their jobs and a sizeable number will simply re-categorise themselves as self employed when they are quizzed as part of the Labour Force Survey. They are likely to be scouting around for jobs and are much likely to take one or more part time jobs when they can.
Part time employment was up sharply, but do not forget that the number of full-time employees fell by 188,000 in the three-month period covering August, September and October - that is more than 2,000 people per day losing their jobs.
read more...»
Unit 2 Macro: Will a Youth Jobs Subsidy Work?
The Coalition Government recently heralded a new scheme designed to address the structural problem of high youth unemployment in the UK economy. Under their “youth contract” plan, employers will be given “wage incentives” worth £2,275 to take on some 160,000 18-to-24-year-olds. But will it have much impact on the problem? The independent Office for Budgetary Responsibility says that the net effect on overall unemployment will be close to zero, because the subsidy incentive will lead to a switch in employment away from older workers.
read more...»Unit 1 Micro: 50 Years since the end of the Max Wage in Football
Around this time of my micro course my students look at maximum prices (price ceilings) in different markets. There are still plenty of contemporary examples to consider, for example salary caps for executives, caps on the cost of mobile phone texts and roaming charges, rent ceilings etc. But here is a resource that will be of special interest to football-loving economists, namely the 50th anniversary of the ending of the maximum wage in football. The Independent has this nifty set of graphics looking at landmarks in wages of top footballers over the years. Click on: The maximum wage and football’s money trail
UK unemployment in November 2011 - a video overview
The presentational style might leave a little to be desired, but this analytical ONS video might provide colleagues with a different teaching resource to help explain the rapid rise in UK unemployment.
read more...»Here there be NEETs.
Regional unemployment is seen as a significant economic problem, but employers may be reluctant to relocate if the educational quality of the workforce is below par. The term NEET refers to young people Not in Education, Training and Employment, and it appears that there are significant pockets of NEETs across the mainland of Great Britain.
read more...»Unit 3 Micro: UK Executive Pay - All in it Together?
At a time when millions of people are taking nominal or real pay cuts, the news that chief executives of FTSE-100 companies have seen their earnings rise by 43% in the last year is particularly difficult to stomach.
read more...»Unit 1 Micro: University fees and elasticity of demand
When teaching price elasticity of demand, here is a good article on the BBC today on the effect of higher university fees on demand for higher education. Good for discussion of how PED will differ with respect to different types of consumer and for different types of universities, as well as the cross price elasticity of demand with foreign universities.
read more...»UK Unemployment in October 2011
There were some desperately disappointing unemployment and employment numbers published for the UK economy today. Even taking due note of the need not to focus too much on one set of data the UK labour market looks to be weakening as fast as the autumn leaves are falling. The human and social cost of the high jobless figures is enormous and the macroeconomic effect of fewer people in work and paying taxes will dent further hopes of a solid recovery.
read more...»Unit 4 Macro: Unit Labour Costs and Inflation
Over many years the rate of change of unit labour costs (ULCs) has been a decent reliable indicator of inflationary pressures in the UK economy. Times when wage costs adjusted for productivity have grown quickly have often coincided with a rise in the annual rate of inflation - little wonder when payroll costs are a sizeable chunk of operating expenses for many businesses.
But in the last couple of years we have seen a growing disconnect between unit labour cost inflation and the published figures for CPI.
read more...»Unit 3 Micro: Monospony Power and Low Wages in Care Homes
An October 2011 edition of Panorama from the BBC investigates low pay and poor working conditions for thousands of people struggling to earn a decent living in the care homes sector.
read more...»Unit 3 Micro: Tube Drivers set to earn £50,000 a year
In these times of austerity, job insecurity and falling real incomes, tube drivers in London appear to have on the table a relatively generous-looking offer from their employers London Underground. A four year pay deal will be put to union members that could take the gross pay of Tube drivers, currently around £46,000, to over £50,000, while some staff could receive a £10,000 pay rise over the four years.
Union density has been falling for a long period in the British economy as a whole but remains high for drivers most of whom are members of Rail Maritime and Transport union under their media savvy leader Bob Crow. The tube drivers would appear to have genuine clout in their collective bargaining negotiations especially with the London 2012 Olympics less than a year away. The authorities will be desperate to avoid or at least minimise the risk of industrial action as the Games come into focus and the eyes of the world are on the capital.
In return for agreeing to temporary changes to existing working arrangements during the Games, all train drivers employed by LU will receive a one-off payment of £500.
read more...»NMW: Classical real-wage unemployment
As the government increased the NMW this weekend by 15p to £6.08 an hour for adults….....the minimum wage may be pricing young people out of work because employers are finding it too expensive to give them their first job, Government pay advisers have said. Good application here for discussing real-wage classical unemployment.
Read more here.
Childcare cost means that working doesn’t pay
I don’t think this dilemma is anything new, but Aviva’s Family Finance Report presents some up-to-date figures which show how difficult it can be for working parents to fund the cost of the childcare that makes it possible for them to take a job. Based on average pay rates, they estimate that a parent of two children working full time would only keep £120 a month of their pay after paying all the costs associated with work, including travel as well as childcare, while those who take a part-time job may actually be £98 a month worse off. The trade-off faced by working parents if they decide to swap the unpaid role of full-time childcare at home for paid work outside the home, which necessitates paying for some other form of childcare, has always been an issue, but the gap between the gain in pay and the loss in costs seems to be getting more difficult to manage.
The report also looks at costs for child-related expenses such as school trips, clothes and sporting activities which have risen by 6.9% over the past year. Compare this with the fall in family incomes estimated at 2% between May and August this year - and the strain on family budgets is very clear. This report goes on to give some more data about the burden of unsecured debt and the measures government is taking to try to make working a more affordable option for families, which will be useful when looking at government intervention to deal with the poverty trap and the distribution of income.
“We need to make more stuff, using the same number of people…”
So says Stephanie Flanders, in this broadcast from the Today programme in which she explores whether or not the growth in employment this week is a good thing. The key, of course, is productivity and the economy’s capacity to grow, and therefore to recover. She explains the interrelationship between manpower and output with her usual clarity,with a brief reference to both sides of the issue, and to the short term and long term consequences of the recent rise in private sector employment - thus giving an ideal essay plan!. This is such a key concept in AS macroeconomics (and A2 as well) that I think this two-and-a-half minute piece is well worth saving and using with new groups of economists next term.
Unit 2 Macro: Reducing Unemployment after a Recession
How quickly do people find new work after they have been made redundant and experienced a period of unemployment?
According to new research published in the May 2011 edition of the Economic Journal, only around one person in every ten unemployed in Britain finds fresh work within a month and nearly half of the extra unemployed created in the wake of an economic shock such as the fallout from the global financial crisis are still without a new job after six months.
If government economic policies and the labour market generally are failing to get people back into paid jobs the impact of a recession on unemployment rates can last for a substantial time period bringing with it increased economic and social costs.
read more...»Protection of British jobs?
Is this protectionist, or is it common sense? Today’s headlines are all about Ian Duncan Smith’s speech in which he urges British employers to give young unemployed workers in the UK a ‘level playing-field’ and a better chance of getting the jobs which are being created.
read more...»China: The End of Cheap Labour
China’s unit labour cost advantage in high-volume manufacturing is being eroded at a faster rate according to this feature piece from Time Magazine. “The average manufacturing wage in China is still only about $3.10 an hour, (compared with $22.30 in the U.S.), though in the eastern part of the country, it’s up to 50% more than that.” There are strong economic, social and political pressures for wages to rise and as they do this will have hugely significant demand and supply-side effects on their economy, for example accelerating the pressure for China to invest more in new technologies and product and process innovation to move higher up the value chain and become less dependent on supplying cheaper products to the rest of the world. My recent China Economics Revision Note focuses on some of these issues.
Structural unemployment in the UK - insights for 2011
The CBI has just published the first in a series of reports into the UK labour market which are certainly useful for A2 economists and their teachers. According to the CBI, the analysis reveals “deep-seated structural problems which will not be solved by a return to economic growth alone.”. The supporting website for this new research project is here. Some great data visualisation tools on the UK labour market are provided too - here is an example.
Global Aging - New IMF Video
A new IMF Finance and Development video on some of the statistics behind global aging is now available. Just click on the link below. The world’s population is getting older. Countries need to think about how fewer young people can continue to support the elderly.
read more...»
AS Macro Key Term: Economic Recovery
A recovery occurs when real national output picks up from the trough reached at the low point of the recession. The pace of recovery depends in part on how quickly AD starts to rise after a downturn. And, the extent to which producers raise output and rebuild their stock levels in anticipation of a rise in demand. The state of business confidence plays a key role here. Any recovery in production might be subdued if businesses anticipate that a recovery will be only temporary or weak in scale.
read more...»Labour Market: Days lost through industrial disputes
Many more days are lost to strike action in public sector industries than in the private sector according to data available here
read more...»AS Macro Key Term: Brain Drain
A brain drain is a term that describes the movement of highly skilled or professional people from their own country to another country where they can earn more money. It has been used to describe net outward migration of people from several European Union countries in recent times (notably Ireland, Greece and Spain) - another phrase for this is human capital flight.
A sizeable brain drain can bring economic costs and benefits for the sending nation. One disadvantage is that countries lose out on the benefits that might have accrued from the resources used in educating people who leave. Add to this the loss of tax revenue from those who choose to live and work overseas. A sizeable loss of skilled workers (many of whom may be younger and therefore more geographically mobile) could lead to labour shortages in the sender country, putting upward pressure on wages and labour costs.
Some of this income earned overseas returns to the sender country in the form of remittances (adding to GNP) and many skilled migrants often leave only for a year or two - the percentage of permanent migration inside the EU is relatively small.
UK economy - as seen by the Bank of England
Students who want to be able to quote current data and trends in the UK economy could do worse than spending some of their revision time picking out the highlights from the Bank of England’s Agents Summary of Business Conditions, published today.
There is plenty of opportunity to find evidence which can be used to back up evaluative arguments in macroeconomics papers here.
Key points
1/ Growth in domestic markets is sluggish at best, but investment in the export sector looks better, probably driven by the rise in exports to emerging markets, Germany and the US.
2/ The service sector looks far from buoyant, with so much spare capacity that investment intentions are low and recruitment in consumer services is down.
3/ Unsurprisingly, import and raw material prices are driving a need to pass on cost push inflation to buyers, although many found that their power to pass on price increases to consumers was very limited, in spite of widespread awareness of the increase in costs - reflecting fears that price elasticity is very high at the moment.
Consequences of One Child Policy Play Out
There has been much coverage in the last few days of the latest data on China’s population trends and in particular strong evidence about the ageing of her population. The demographic dividend of the fast population growth during the Mao era is well and truly over.
The annual growth of the Chinese population is falling away - the average annual growth was 0.57% over the last decade, down from 1.07% in 1990-2000. And when the age structure of the population is analysed, we find that the number of people over the age of 60 rose by about 48m, reaching 13.3 per cent of the population. China’s total population is now 1.339bn – up 5.84 per cent from the last decade. The number of old people in China has grown by more than the population of Spain over the last ten years and there is growing pressure for a reversal of the controversial one-child policy.
read more...»EU Enlargement - Evaluating the Impact
Many of Europe’s newer member states have outperformed established EU countries since they joined the single market in 2004 and 2007. And as a result there has been a process of convergence in average living standards and improved employment opportunities. Europe’s new nations have injected extra dynamism into the region despite inevitable teething problems along the way.
For students revising aspects of EU enlargement here is a streamed version of a presentation I gave to a Tutor2u event in London a few weeks ago
A streamed version of the presentation is available here
PDF Handout of the presentation
Related news issues
Germany expects influx of Polish workers (BBC news, April 2011)
read more...»
