Are the Olympics responsible for this unlikely decrease in unemployment?
According to the Office of National Statistics, the number of unemployed people fell by 65,000 to 2.58 million in the three months to May — with unemployment amongst young people falling by 10,000. This means that the unemployment rate is now 8.1%, down from 8.3% in the previous quarter.
Although this is good news, the statistics also tell us that the number of long-term unemployed (those out of work for more than two years) has risen by 18,000, whilst the number of people claiming Job Seeker’s Allowance increased by 6,100 to 1.6 million, in June.
Significantly the biggest falls in unemployment, and increase in work, was in London, giving rise to the theory that the Olympic Games are having an impact on the figures.
Peter Dixon of Commerzbank warned that it was “entirely possible that there will be a temporary boost due to Olympics, possible that there will be more to come, but if this is Olympic-related temporary hiring, it is likely to be unwound again later in the year”.
Commenting on the ONS Labour Market statistics released today, Gerwyn Davies, Labour Market Adviser at the Chartered Institute of Personnel and Development (CIPD), comments: “The labour market continues to defy the laws of economic gravity, with employment up and unemployment down, despite stalling growth forecasts and stuttering confidence. The downside is that, for now, we have a seemingly entrenched pattern of falling productivity and subdued pay affecting the competitiveness of employers and the living standards of employees. The employment picture is encouraging, but the missing ingredient is economic growth – without which the risk remains that another shock of any kind may send our surprisingly resilient labour market into reverse.”