Macroeconomics: UK economy, IB Economics

This sort of thing is seen by many as peripheral - and in one sense it is - but in another it's a fundamental problem with current labour markets, and may contribute to rising in-work poverty. Changing benefit rules have created a class of people trapped in low-paid jobs with little prospect of promotion and there's some fascinating material about the effective marginal tax rates of moving into part-time work from benefits and from part-time work to full-time work, with the latter more heavily penalised since the late 1990s. 

It's a great introduction to the concept of under-employment too. 

Larry Elliott looks at the state of the UK labour market, noting that unemployment is at its lowest in nearly 50 years - since 1974 - at 3.7% but that this might be misleading. Yes, the number of job vacancies exceeds the number of registered unemployed, implying that we've gone above the level of full employment. 

However, the headlines conceal that differences between different parts of the labour market - both in geographic and sectoral terms - mean that not everyone is experiencing 'full employment' and that there's also an awful lot of under-employment too. 

The Resolution Foundation's latest research into the changing nature of the UK labour market suggests that whilst young people may be finding their way back into work, it's only through the gig economy, and temporary, or zero-hours contracts. As such, many of these people are likely to be under-employed and they certainly have little in the way of job security. 

The Resolution Foundation have taken issue with the latest unemployment data, arguing that whilst official unemployment has stayed at 3.9%, the true level of unemployment is higher than this. They point out that over the same time period there's been a 23% decline in the number of hours worked, and this implies that there's significant underemployment, and that the claimant count doesn't reflect labour market realities. 

When added to other views of the economy, with some suggesting that we're going to experience unemployment of around 4 million going forward, it's clear that tough times are ahead. 

This is a fascinating look at the way unemployment is calculated with the OECD and Centre fro Cities claiming that unemployment data isn't accurately capturing the number of people unemployed. They argue that if you factor in so-called 'adjusted economic activity rates' some cities have a 'true' unemployment rate of three to four times the stated figure.

Of course, in the official data, these people are classed as economically inactive, but many of them would claim that their inactivity stems from a lack of jobs and that if there genuinely were jobs available, they would be economically active.

It's a reminder that when measuring unemployment, it's also worth thinking about related concepts such as the level of economic inactivity - and the causes of inactivity - and concepts such as 'underemployment'. Both of these create greater awareness of the true extent to which there is spare employment capacity.

This is a really interesting attempt to drill down into the latest unemployment data and highlights some worrying trends in the UK labour market. Surprisingly, it's not an article that spends a lot of time talking about underemployment, although that's clearly a part of the problem. 

Instead, it looks at the fact that, at a time of uncertainty, firms have chosen not to invest in capital, because of the fixed costs associated with this, but have hired workers, knowing that they will be able to hire them, if things take a turn for the worse.

Other factors that merit consideration include: record levels of employment among migrant workers, and, the fact that we are all working longer hours.

Add in the suggestion that income inequality is rising, and the government's claims that the strong performance of the economy in relation to unemployment is indicative of economic strength starts to ring a little hollow. 

Clearly, this is the major story of the day - and it will be trumpeted as such. However, there's already a bit of chatter on Twitter about a number of issues relating to this.

In the first place, some are suggesting that a change in the cohort being sampled for the Labour Force Survey has had a significant effect on the numbers - which is interesting.

Secondly, given the rise of zero hours contracts, a lot of people are now wondering whether looking at under-employment is increasingly necessary to get a true reflection of the state of the UK labour market. 

Good news for the economy: Amazon is still hiring. Another 2,500 jobs - but might you question the types of job being created? And are they indicative of underemployment?

Research by the think-tank Centre for Cities suggests that official unemployment figures understate the number of people who are unemployed and a distinct North-South divide in the data. 

They estimate that an extra 3 million working age adults might be involuntarily economically inactive as a function of ill health. 

Is under-employment the new unemployment? What is happening to wages, if some people claim that pay growth may be helping to stoke inflation? 

This and other questions will, no doubt, receive coverage later today.

Going up! 

Unemployment continues to rise with a record number of redundancies in the last quarter, and the official rate of unemployment climbing to 4.8%. Factor in the under-employed and those who've left the labour market and the true costs of unemployment are unlikely to be captured in this data. 

Unemployment  has continued to fall, to its lowest since 1975, more than 40 years ago. However, it might be argued that whilst this is ostensibly a good thing, we should note that the method of calculation has changed, and the number of economically inactive remains a concern.

Additionally, we might consider whether unemployment data also serve to conceal a more invidious problem - underemployment - which would help explain rising levels of child poverty.  

The latest labour market data suggests that employment is up to its highest since 1971, and unemployment is at, or around, record lows. So what's the concern?

Well, these figures hide underemployment, and there are also worries that a lack of investment implies that a lot of these jobs have little job security, meaning that in the event of a post-Brexit shock, many of them could be shed. Additionally, the lack of investment also has adverse implications for productivity, and that is a longer term concern. 

The continued strength of the jobs market, with record numbers in employment might get you thinking. Is unemployment the biggest problem in the labour market or is it under-employment.

It is equally clear that there are costs to both, but the unemployment that remains must be almost exclusively supply-side, given that current levels of spending are so low. 

However, on the plus side, real wages are rising which should be good for workers.

Larry Elliott looks at the theoretics of a possible interest rate rise in August and argues that Bank of England might be in danger of applying the wrong logic in support of a rise in rates.

He points to some research by David Blanchflower and David Bell that implies that, rather than looking at traditional Phillips Curve analysis of the labour market which largely looks at the level of employment relative to the natural rate of unemployment, the Bank needs to pay more attention to under-employment as a way of explaining pay restraint despite seemingly low unemployment.

It's a very interesting, and plausible, explanation.