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The Jobs Market Is Booming - So Why Is Everyone So Gloomy?

22/07/2016 10:19 | Updated 22 July 2016

The media has been dominated by doom and gloom in recent weeks. Analysis of the reasons behind the Brexit vote point towards a deep seated sense of exclusion and dissatisfaction in many parts of the country. However, employment growth has been a real success story in recent years.

Yesterday's figures showed that the employment rate, at 74%, is the highest since comparable records began in 1971. Employment growth in 2014-15 was the fastest since the late 1980s and was mainly driven by increases in full-time private sector jobs. The number of children living in workless households has fallen from 23% in 1994-5 to 15% in 2014-15. Household earnings have been rising, because more second earners are finding work and people are working more hours.

This is, of course, to be hugely welcomed. But why isn't the outlook more optimistic? Our research points to four reasons.

  1. The recovery has improved incomes, but very slowly. Overall, average incomes have finally risen above pre-recession levels but this has happened extremely slowly. Real earnings are still lower than in 2008, and not all have benefited from increased incomes. Adults aged 31 to 59 still have incomes only just matching pre-recession levels, and the incomes of those aged 22 to 30 are still 7% lower than they were in 2007/8.
  2. People are working more but this isn't really reducing poverty. Most of those in poverty are now in working households, and poverty rates haven't significantly come down in recent years.
  3. High costs, slow earnings growth and cuts to benefits leave many struggling to afford the basics. The National Living Wage, tax cuts and help with childcare costs have helped many families. But they haven't been enough to offset the impact of rising childcare and housing costs, low pay and cuts in benefits. Our research shows that some families, especially lone parents, are now further away from reaching a Minimum Income Standard than they were in 2010.
  4. Some parts of the country lag behind on employment rates, as well as pay. For example, the employment rate is 69% in Northern Ireland, 71% in the North East, 71% in the West Midlands. The Government needs a plan to boost growth and living standards in poorer areas of the country, especially once EU funding runs out.

We now have a new Prime Minister, a new Cabinet and a chance to map a positive path towards greater economic security and an orderly Brexit. When Theresa May set out her stall she promised to fight the 'burning injustice' of poverty, discrimination and lack of opportunity.

Our analysis shows that she needs to do this with a comprehensive plan to ensure the country's economic prosperity goes beyond rising employment. It needs better skills, affordable childcare and housing and better pay and security for those who are struggling to get by for us all to feel better off. Otherwise, the post-Brexit gloom may struggle to clear, despite the rise and rise in employment.

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