On Wednesday the Office of National Statistics released information which can be seen as an indicator to how the British economy is faring. The unemployment rate of the economically active population is now 6.9%, the lowest since 2009 and the number of people in work is 30.39 million. The number of people out of work fell by 77,000 to 2.24 million in the three months to February. The jobless figure for 16 to 24-year-olds fell by 38,000 in the three months to February to 881,000, the lowest for five years (source BBC business).
What does this mean in reality? In a perfect scenario everyone would be employed, earning money living happily ever after – however their are a finite number of resources and jobs available. There has been a mindset shift amongst individuals where they are now content with doing a diverse range of jobs than just their preferred role which was over saturated with respect to the number of applications received for each individual job opening. A reduction in the number of unemployed individuals is definitely positive for many reasons. Being able to provide for ones self provides a psychological sense of independence, which should* lead to improved morale and long term productivity. Productivity is an interesting one however because it’s not the easiest variable to measure – a traders measure of productivity would be completely different to a cleaners appraisal.
A reduction on the number of unemployed individuals in the UK also has an impact on the amount of benefits claimants. The claimant count – the number of people claiming Jobseeker’s Allowance – fell by 30,400 to 1.14 million in March. This is positive as benefits are essentially paid by government through the income generated primarily through taxes and spending cuts so the less benefits paid by the government, the more money saved which could be to reform the economy.
Also the Gross Domestic Product / Gross Domestic Income of the UK will increase. The higher the GDP, the healthier the country is economically, so this is definitely a positive sign for Britain. Youth unemployment however is still an issue. Although the amount of 16-24 year olds without work is decreasing, the youth unemployment is worryingly high at nearly 20%. Curbing this is a priority for Labour Government if they win the next general elections – under their Jobs Guarantee plan, 18 to 24-year-olds out of work for a year will be offered a taxpayer-funded job for six months – with those who refuse losing benefits.
In conclusion there is still a lot of work globally that needs to be done to fully recover from the aftermath of the financial crisis but the signs definitely good for the UK, considering parts of Spain still boast of unemployment rates of around 26%. Continued and stable progression should be the aim, with the low interest rates remaining low for the considerable future, companies can afford to borrow more to expand their operations and hire even more people who are out of work.
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*This is my assumption and cannot be taken as a scientifically proven theory – it makes sense though right!