Self employed take a hit as unemployment continues to rise

Official figures published today by the Office for National Statistics (ONS) show that the UK labour market remains subdued with unemployment continuing to rise on both the Claimant Count and Labour Force Survey measures. But despite disappointing news, especially for the self-employed, there are tentative signs of a welcome pick-up in private sector services, says CIPDís Chief Economist John Philpott.

Dr Philpott continues:

ìThe latest jobs figures are a mixed bag of good and bad news. On the positive side the number of people in work is up, and there are more vacancies in both private sector consumer services ñ notably shops, hotels and restaurants, which were until recently in the doldrums ñ and business and financial services. And pay pressure overall remains weak, with much slower earnings growth in the public sector offsetting somewhat larger pay rises for private sector workers. In a reversal of the trend of recent years, public sector staff are once again starting to fall behind the rest of the economy.

ìHowever, there is also much in these figures to disappoint. Although the rise in unemployment is explained in part by a rise in the available supply of labour ñ migrant workers being joined in the job market by more lone parents and long-term sick people as the government makes greater effort to move these people off benefit ñ the overall demand for labour is subdued. There was a sharp drop in self-employment in the latest quarter, possibly linked to the availability of fewer contract opportunities in the public sector, which is now experiencing a marked slowdown in employment growth as well as pay growth.

Philpott continues, ìThe figures also suggest that employers are wary of hiring permanent staff, with two-thirds of new jobs being temporary. Meanwhile total hours worked in the economy have fallen and there has been a further slight rise in the number of people being made redundant. None of this indicates that the labour market is in particularly poor shape. But with the market clearly off the boil at present there is nothing in these figures that strengthens the case for an early rise in interest rates.î