UK: Deloitte Monday Briefing: Where Are The New Jobs Coming From?

Last Updated: 18 February 2013
Article by Ian Stewart

The Monday Briefing, written by Ian Stewart, Deloitte's Chief Economist in the UK, gives a personal view on topical financial and economic issues.

  • The UK labour market has proved resilient through the Global Financial Crisis.
  • In the recession of 2008/09, many companies held on to staff even though demand fell away. The last two years have seen strong growth in private sector employment against a backdrop of a weak and erratic recovery.
  • Today, a record 29.7 million people are in employment in the UK. Since the labour market recovery started in 2010, the UK has generated an impressive 833,000 new jobs.
  • The nature of this growth shines light on changes in the economy and the UK labour force.
  • Of the 833,000 jobs created since 2010, 40% were self employed, 47% part-time and 36% were in full time employment. 63% of the new jobs went to those aged over 50 while foreign-born workers account for almost two thirds of all new jobs created since 2010. (Note that since these categories overlap the percentages do not sum to 100%).
  • Self-employment and part-time work now account for 38% of all jobs. Part of the recent increase reflects the difficulty of finding full-time work. But the trend to part-time work and self-employment pre-dates the Global Financial Crisis by at least a decade.
  • The UK is also seeing a long-term shift towards an older, more international labour force. Longer life spans and diminishing pension entitlements partly account for the rise in the numbers of over 50s in the labour force. Meanwhile EU enlargement and the march of globalisation have led to a marked rise in the UK's foreign born workforce. The proportion of people working in the UK who were not born here has risen from 7.0% in 1997 to over 14.0% or 4.2 million today.
  • A more recent trend is a shift from public sector to private sector jobs. Since 2010, the private sector has created 1.37 million new jobs, easily compensating for the 381,000 jobs lost in the public sector.
  • Four sectors, which make up a quarter of all jobs in the UK, have accounted for three quarters of the new jobs created since 2010.
  • These "super growth" service sectors are diverse and cover 1) hotels, catering and restaurants; 2) communications, media, software IT and web related work; c) law, accountancy, consultancy, engineering, architecture, PR, design, R&D and advertising; d) renting, leasing, security services, employment agencies, call centres, facilities management.
  • The government has high hopes for a manufacturing revival, but this sector is very unlikely to be a big creator of new jobs. Manufacturing accounts for 8% of all UK employment and, along with the public sector, construction and financial services, has shed jobs since 2010.
  • The growth in employment has been fastest in London, the South East and the East (East Anglia, Hertfordshire, Bedfordshire and Essex).
  • The UK's jobs recovery points to continued growth in large swathes of private sector services. It is a recovery in which self-employment, part-time jobs, older and foreign-born workers are playing a big part.

MARKETS & NEWS

UK's FTSE 100 ended the week flat.

Here are some recent news stories that caught our eye as reflecting key economic themes:

KEY THEMES

  • UK retail sales unexpectedly fell by 0.5% in January compared to a year earlier, according to figures from the Office for National Statistics (ONS) – retail sales
  • The Bank of England announced that it expects UK consumer price inflation – currently at 2.7% - to rise to at least 3% by the summer and to remain above the Bank's official 2% target for the next 2 years – inflation
  • UK average wages, adjusted for inflation, fell back to 2003 levels in 2012 according to data from the ONS, due to rising inflation and slow wage growth – squeezed consumer
  • Analysts at Morgan Stanley claimed that Spain "is on its way to become the euro area's next Germany", due to falling wage costs and reforms – eurozone adjustment
  • Spanish tax inspectors made approximately 15,700 in-person inspections in 2012, up from 8,700 in 2011, with tax collections rising by 11% annually – eurozone reform
  • Greek inflation was recorded at an annual rate of 0% in January, its lowest level since data began in 1996 – eurozone adjustment
  • The Portuguese government claimed it is "very close" to returning to the bond market and exiting its bailout programme, which it entered in to in May 2011 – Portugal
  • Japanese investors invested $22bn into European assets in Q4 2012, according to data from the Investment Trust Association of Japan and Westpac – Japan
  • Corporate bond issuance by eurozone businesses rose 14% in the year to December, according to data from the European Central Bank (ECB), the fastest rate of growth since May 2010 and a clear sign corporates are shifting away from bank borrowing – corporate debt
  • The economy of the 17 nations in the euro shrank by a worse-than-expected 0.6% in Q4 2012 – euro slowdown
  • Japan's GDP shrank by 0.4% at an annual rate in the last three months of 2012, the third straight quarter of decline - Japan
  • The US government reported a surprise $3bn budget surplus in January, the first surplus since 2008, with the Treasury netting $9bn from the expiration of a payroll tax deduction on January 1st – US deficit
  • Overall sales of mobile phones fell by 1.7% in 2012 compared to 2011 according to research firm Gartner, the first fall in 3 years, as consumers shifted away from cheaper handsets to more expensive smartphones – smartphone revolution
  • American Airlines and US Airways announced that they were merging, the last of the big American carriers to do so – M&A
  • So far, dealmaking in the US technology, media and telecoms market, has seen its busiest start to a year since the dotcom boom of 2000 – M&A
  • The Venezuelan government devalued the Bolivar by 32% against the US dollar, in an effort to boost its economy – devaluation
  • The number of first-time buyers entering the UK housing market reached 216,000 in 2012, the highest level in since 2007 – mortgage availability
  • As many as 24 ethanol plants in the US have been forced to shut down, with others staying open only to perform maintenance tasks, due to a persistent shortage of corn caused by ongoing draught – commodities
  • Amazon beat Apple to become the most reputable company in America, according to an annual survey conducted by Harris Interactive – consumer confidence
  • McGraw Hill Cos, the owner of the world's largest ratings company Standard & Poors, was downgraded by its biggest rival Moody's after the US government filed a lawsuit seeking as much as $5 billion in damages from S&P – ratings agency downgraded
  • In an attempt to contest its reputation as one of Russia's dirtiest cities, the city of Chelyabinsk, hit by a 10-tonne meteorite last week, put out a $10,000 tender for IT firms to 'optimise' internet search results by ensuring phrases such as "radiation in Chelyabinsk" and "dirtiest city on the planet" appeared further down the list – clean-up
  • The sole employee of Germany's smallest bank, the Raiffeisen Gammesfeld eG cooperative bank established in 1870, claims the bank has seen increased interest since the financial crisis, but has had to turn away loan-seekers who do not live in the 500-inhabitant village of Gammesfeld – local bank

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