AS Macro Key Term: Under-employment
Under-employment happens when people want to work full time but find that they can only get part-time work – the result is a loss of hours that the economy can use and a reduction in supply-side production capacity. This is a common feature of a recession or a slowdown in economic growth which causes a reduction in the number of full-time job vacancies. One feature of the recession in the UK has been a significant rise in part-time employment. As our chart below shows, there is now well over a million people in the UK who are in part-time work because they couldn’t find a full-time post.
Total part-time employment in the UK has expanded by nearly two million since the early 1990s. Partly this reflects a shift towards a more flexible labour market - the demand for part-time flexible work patterns often times comes from both employees and employers.
read more...»Timetric: Unemployment in the US Economy
One of the most keenly awaited macro statistics in the USA is the monthly data on employment and unemployment. For some time there have been fears that the huge fiscal and monetary policy stimulus programs seem to have been having little effect on the jobless rate.
As we can see from the charts below there are tentative signs that a more durable economic recovery is setting across the Atlantic. The unemployment rate has fallen to a two year low, employment in private sector businesses is expanding and the steep fall in manufacturing employment seems to have come to an end (for now). Getting unemployment down is crucial for Obama with the next Presidential electoral campaign in view. And it is also important for the wider health of the world’s biggest economy.
One of the really striking things about the recent recession and weak recovery has been the dramatic increase in the mean duration of unemployment in the USA compared to previous bouts of cyclical unemployment. My third chart in this blog looks compelling and suggests that it has been really hard for those who have lost their jobs in the wake of the global financial crisis and the subsequent recession to find fresh work. Long-term unemployment is a structural problem in the labour market and it becomes harder to resolve as the length of time spent out of paid work grows month by month.
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Structural unemployment - Top 10 Dying Industries
The Wall Street Journal Blog has this excellent list of ten industrial sectors that are being left behind by technology or have been hurt by cheaper overseas competition - super for getting good examples of industries where structural unemployment is caused by a big shift in the pattern of employment.
Accessible UK Budget resource
It’s not always easy to navigate your way through the budget, with its mass of technical detail and complexity. Not all of it is terribly interesting either (nor the manner of presentation).
read more...»Keeping Track of UK Macro Objectives
Traditionally towards the end of an AS macro course we brings things together by focusing on the possible trade-offs or dilemmas facing economic policy-makers not least in an age of great uncertainty and change. I have usually emphasised the following macro economic indicators as being key though others are sure to differ!
* Price stability (low positive inflation)
* Rising employment / an improving unemployment rate
* Sustainable growth of real GDP / national income
* A degree of balance in trade in goods and services (a sustainable external position on the current account)
* Manageable public sector finances - including sustainable debt levels and annual budget financing
In this blog and using the Timetric data I plan to keep all of this data in one place and automatically updated so that I can return to it when needed and so too can students if they need to refresh quickly and easily what is happening in the UK economy. The charts can be found below
read more...»Timetric: Unemployment Rates for Selected Countries
In this Timetric chart blog we look at unemployment rates for a selection of country groups - these automatically updated charts will track what is happening to the standardised jobless rates for clusters of countries starting with one that includes the Euro Area, Germany, USA, UK and Japan. The second chart is the unemployment rates in the so-called PIIGS - Portugal, Italy, Ireland, Greece and Spain
read more...»Timetric: Part Time Working in the UK
There has been a strong long-term rise in the number of people working part time in the UK labour market. Indeed at the end of 2010 over seven and a half million people were measured by the labour force survey as being in a part time job. Partly this reflects a shift to a more flexible labour market but in the short term some of the rise is the number of people who opt for reduced hours employment because they cannot find a full time post - notice in our Timetric chart how this group of people has grown since the start of the recession. Will it fall back as we head through 2011?
read more...»Timetric: Total Employment in the UK Economy
The level of employment fluctuates over time as an economy progresses through the business cycle and because of structural changes in economic performance, labour market activity and the total population. Our Timetric chart tracks total employment and shows the extent to which jobs were lost during the recession and whether they are recovering sufficiently well as we head into the upturn.
read more...»Timetric: Public Sector Employment
There is much debate and discussion about the Coalition government’s fiscal austerity programme and the tens of thousands of public sector jobs likely to be shed over the remainder of this Parliament. Our Timetric chart today shows total public sector employment and indicates that the jobs contraction has certainly started reversing a long time period of growth in state sector jobs. Much of the spike in numbers post 2007 came from the transfer of several commercial banks into state ownership in the wake of the global financial crisis. The biggest single employer in the public sector is the NHS - here a turning point in employment has begun.
read more...»Timetric: Regional Unemployment in the UK
Has the recession brought about a fresh divergence in regional unemployment rates in the UK labour market? Why do some regions experience persistently higher levels of joblessness and is regional policy having any effect. The starting point is the data and this chart shows a selection of regional unemployment rates in the UK courtesy of Timetric. The chart below that provides data on another selection of regions.
read more...»Structural Unemployment - The Last Cast
In the spring of 2010 the iron and steel making plant at Corus in Redcar in Cleveland was mothballed seemingly ending a 150-year-old industry on Teesside and bringing with it an enormous challenge to the local labour market. BBC Teesside has produced many resources on the plant closure that will make the issue of structural unemployment vivid for students who want to understand many of difficulties of getting people back into work who have skills specific to heavy manufacturing. Here is a link to three short film clips on the impact of the Corus closure
Unemployment in Germany and Spain
For many years Germany was criticised for persistently high unemployment rates and an inflexible labour market. But having weathered the worst of the steep contraction in global manufacturing output and trade in 2009 the German economy is being propelled forward by a strong surge in export sales. Unemployment is falling and for the first time in recent memory, the official jobless rate in East Germany is now lower than the state of California!
Youth Unemployment - Not as high as we are told?
The Timetric team have posted a revealing blog about the true scale of youth unemployment in the UK labour market. High levels of unemployment among younger workers is undoubtedly a major economic and social problem - so too is persistently high jobless rates among other groups of the population including families, localities and regions where second and third generation unemployment is a deep-rooted cause of poverty. But it appears that the published data on youth unemployment may be misleading. “Around 3.4 million 18-24s are in work, 1.7 million are inactive (mostly in education, but not looking for work), and “just” 0.7 million are unemployed. These unemployed youths are important and deserve attention but are barely 1 per cent of the population.” More here
Challenges facing the London Economy
James Bevan Chief Investment Officer of CCLA Investment Management spoke at our student global economy enrichment day at Fulham last week and part of his talk looked at the unemployment problems facing the London economy. His comments are produced below:
read more...»Unemployment in the UK Economy - Chart Resource Download
Many teachers are covering the economics of unemployment as part of their AS economics teaching at this time of the year. I have put together a selection of ten updated charts on aspects of unemployment in the UK and a selection of EU and other countries - this is available as a powerpoint download.
Unemployment charts
Unemployment_Data.pptx
Youth Unemployment in the UK
Many students and teachers will be looking at the issue of rising unemployment in the UK at the moment - focusing on the causes of effects of a high number out of work and also the effectiveness of different strategies for getting people back in a job. Youth unemployment is an especially important structural problem in the labour market and new figures find that nearly one young person in five is unemployed. Indeed 260,000 under-16s live in homes where nobody has ever worked. Here are five links to supporting resources including news articles, background comment pieces and videos.
read more...»Will we have to live with high unemployment?
Will many advanced economies have to live with a new semi-permanently higher level of unemployment as a consequence of the global financial crisis, economic slump and a period of fiscal austerity?
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Revision: Consequences of Unemployment
Persistently high unemployment create huge costs for individuals and for the economy as a whole. Some of these costs are difficult to value and measure, especially the longer-term social costs.
read more...»Using Google Docs - Minimum Wages
My AS micro group this week has been collaborating on an assignment on minimum wages using Google Docs. My stuents are becoming more adept at building arguments and editing and amending the contributions of others. We are limited in not having wireless access in the classroom - if we did students could enter, log in and work as a group in real time with the document being displayed on a screen and I could monitor their contributions and add in ideas and comments as we go.
read more...»Migration caps and the supply-side of the economy
The Coalition’s plans to bring down annual net inward migration into the “tens of thousands” is running into some well organised, influential lobbying from business and academic organisations who complain of the impact this will have on the UK’s competitiveness. It is neither equitable or efficient for highly paid (often under-performing) footballers to be given an exemption under the migrant cap but not for skilled scientists from non-EU countries who may well become the distinguished future leaders of our scientific community. This report last night on Newsnight by BBC Science Editor Susan Watts makes the argument clearly and persuasively. Migrant controls damage the supply-side potential of the economy.
Revision Presentation on Unemployment in the UK
This is a revised presentation on unemployment in the UK labour market aimed at A2 macroeconomics students. It is in three formats
read more...»Apprenticeships for a Silver Generation
The oldest contestant in the new (6th) series of The Apprentice is thirty one! But why should apprentices be concentrated only among those in the early stages of their careers?
The number of people aged fifty and over who are applying for and winning places on apprenticeship schemes has more than doubled in the last few years as this BBC news video explains. Apprenticeship programmes for older workers challenges our common preconceptions about their place in the labour market - and this is a good thing as the debate continues about how best to support and encourage people to stay in work during these challenging economic times. Lifelong learning is not merely a vaccuous slogan - it has a real meaning and is hugely important for the British economy in the years ahead.
This video reinforces the importance of human capital, the need for flexible skills to avoid structural unemployment. And it raises questions about who should and who can fund apprenticeship schemes and their longer-term economic and social benefits.
Hysteresis in the US Economy
The idea of hysteresis from the current recession is well illustrated in this article.
Millions of Americans risk falling out of the job market forever, the Organisation for Economic Co-operation and Development said today, as it cautioned a full recovery will take years. This recession has left the US with a long-term unemployment rate - a measure of those without work for more than six months - of 4.5pc, almost double that seen in the downturns of the 1980s and 1990s… Read more here.
read more...»Policies for long-term unemployed in Denmark
Here is an intersting clip from the New York Times website that looks at the Danish model for dealing with the unemployed.
In Denmark unemployment is at 4.2% which is well below the EU average of 9.7%. When you become unemployed you are guaranteed 70% of your income for 2 years – was 4 years before the financial crisis.
They also spend big money on education and training. How do they fund this? Income tax rates range from 42.9% – 63% and not surprisingly it is the most taxed country in the world. Click here to go to the video on the NYT site
81 million young workers unemployed in 2009
The global financial and economic crisis has spurred a record increase in youth unemployment according to a new report from the International Labour Organisation.
This deeply important structural issue for the UK and many other labour markets is not confined to developed nations. In developing / emerging economies where 90 per cent of young people live, youth are more vulnerable to underemployment and absolute poverty. The ILO reports that 152 million young people, or about 28 percent of all the young workers in the world, worked in 2009 but remained in extreme poverty in households surviving on less than US$1.25 per person per day in 2008.
More here from the Guardian and here is a link to the ILO report on the problems of youth unemployment in the global economy. And a report on long-term youth unemployment in the UK from the Telegraph.
King on the economy
The Guardian offers a good summary of the main issues arising from Mervyn King’s recent Inflation Report. There is a great little animation in the middle of this article to show how each month the Bank’s projected growth figures have always proven to be a little too optimistic and how they have deteriorated over the past couple of years.
read more...»Reasons to fear a jobless recovery
Will the UK labour market be able to generate enough new jobs to sustain the recovery? There are plenty of doubts surfacing at the moment and we might be finding ourselves on the cusp or yet another surge in structural unemployment. Here are some reasons why - despite our much vaunted flexible labour market - a jobless recovery is on the cards.
read more...»Where next for the UK economy?
The Independent newspaper yesterday carried a pessimistic interview with the Chief Economist of the Bank of England (Spencer Dale) in which he commented on the risk of a “triple whammy” for the British economy - namely a dubious combination of anemic growth, rising inflation and much higher unemployment. The interview is available here. According to the piece “The economy, said Mr Dale, would not return to normal “for an awfully long time”.
Tough times ahead for sure but perhaps there are also grounds for optimism not least for manufacturing industries able to export their products to economies that are emerging from the downturn. And the latest (albeit provisional) data for UK GDP shows an economy much stronger than many people expected. The UK economy grew by 1.1% in the three months from April through to June - close to double the growth rate that was expected by the markets.
I have updated my keynote presentation on recent macroeconomic developments for the UK economy. This seventy-five slide presentation covers many of the main macro indicators and focuses on some of the risks and opportunities for Britain into the next crucial stage of the cycle.
read more...»AS Macro Revision: Cyclical unemployment
This is a revision blog on cyclical unemployment. Cyclical unemployment is involuntary unemployment due to a lack of aggregate demand for goods and services. This is also known as Keynesian unemployment. When there is a recession or a slowdown in growth, we see a rising unemployment because of plant closures, business failures and an increase in worker lay-offs and redundancies. This is due to a fall in demand leading to a contraction in output across many industries.
read more...»Warnings of hysteresis for the EU economy
This is an updated blog post on the topic of hysteresis in the EU economy. The recession and financial crisis may lead to a permanent loss in potential economic output and a slower trend rate of growth in the future according to a study by the European Commission. The fall in potential GDP will be an example of hysteresis effects across the European economy and the cyclical downturn in output and jobs creates long term damage.
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