The employment miracle goes global
Britain’s employment figures have never looked better. Thankfully, says Matthew Lynn, we’re not alone.
Britain's employment figures have never looked better. Thankfully, we're not alone.
The British employment numbers are so consistently good that we almost take them for granted. This month unemployment fell to just 3.9%, the lowest level since 1975. The total number of people in work rose to an all-time high of 32.7 million. At the same time, wages rose by 3.4%, well ahead of inflation. There may be plenty of headwinds to contend with, from retail chains collapsing into bankruptcy, to uncertainty over Brexit, to a sudden slowdown in the rest of Europe. But through it all, the UK keeps on creating lots of new jobs.
Workers of the world get busy working
There are convincing explanations for that. We have a flexible labour market, relatively weak trade unions, and low taxes on employment although we also have a rapidly rising minimum wage. It is relatively easy to hire and fire people in this country. And yet, when you look around the rest of the world, the numbers are often just as good. In Australia, despite a weakening economy, the unemployment rate dipped below 5% this month, taking it to its lowest level since 2011. In January, the US marked a record 100 consecutive months of net job creation. Unemployment has fallen to less than 4%. Canada chalked up a record rate of job creation in January; in Germany, despite falling factory orders and a stagnant economy, the unemployment rate has fallen to the lowest level since reunification.
Moreover, this is happening despite widely different labour-market policies. The fexible labour/weak unions combination prevails in the US. But Germany has far stronger unions, and Canada has more restrictive labour laws than we do. So long as the law doesn't make it impossible to fire anyone, as in Italy or France, for example, there seem to be plenty of new jobs regardless of local labour policies. That suggests something deeper is happening.
Three trends that keep us working
We hear a lot about all the jobs that have been destroyed by the internet, especially in areas such as retail. But it is easy to overlook the millions of jobs that have been created. There has been an explosion in small businesses and self-employment because a networked economy makes it a lot easier for micro-business and high-skilled freelancers to flourish. At the same time, the "gig economy" comes in for plenty of criticism, but all those Uber drivers and part-time Airbnb landlords are earning a living in ways that they couldn't have done before. Technology has destroyed some jobs, but it has created a lot more.
Social change has had an impact
It has taken a long time, but women are now fully integrated into the workplace. In the UK, for example, the female participation rate now stands at 71%, the highest level since the statisticians started compiling the numbers in 1971. And we are by no means exceptional on that score in fact, we rank thirteenth in the world, according to the OECD think tank, for the percentage of women in work. The same trends are at work around the world. The same is starting to be true of older workers as well. As retirement ages fade away, far more people in their 70s will remain in some form of employment.
Work has become more flexible
The nine-to-five factory or office job, with its rigid hours, and usually held down by a man with a wife at home, is increasingly a thing of the past. Instead, companies have become a lot better at creating different kinds of flexible, part-time, work-at-home jobs, and that enables far more people to be employed, even if not full-time. Technology helps, but there has also been a recognition from employers and society more widely that work comes in lots of different forms and employers need to adjust to that.
It is fashionable to worry about thedeath of work. There are lots of serious-sounding think-tank reports about howwe have to control the spread of automation, and lots of scare stories about how robotics and artificial intelligence are about to wipe out whole industries. Yet there is more work around than ever and that shows no sign of slowing down. Whatever else happens to the global economy, the jobs miracle will run and run.