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It would have been bizarre for the Chancellor not to have greeted today’s employment news positively. With the jobless rate falling from 4.1 percent to 3.9 percent, it is at its lowest level since the three months to January 2020 – pre-pandemic, in other words. Two years ago, the headlines were determined by lurid headlines of coronavirus’ expected impact on unemployment – with the Office for Budget Responsibility’s July 2020 forecast predicting it would hit 12%. That would have been a rate not seen since 1984, when Mrs Thatcher was triumphing over inflation/consigning a generation to the dole queue (delete as appropriate).

Why Rishi Sunak has avoided being the villain in 2022’s answer to Billy Elliot is not only because of his natural affability, but because of a combination of interventions, luck, and the dismal predictions of practitioners of the dismal science. Despite the economy facing its biggest contraction in 300 years – since the Great Frost of 1709, fact fans – the Treasury’s jobs retention scheme successfully supported 8.4 million workers by the end of May 2020, at the not inconsiderable cost of £14 billion a month. Yet Sunak argued at the time of launching the scheme that the government wouldn’t be able to save every job. So why isn’t the evening news dominated by dole queues, grim-looking charts, and grumpy flat-capped men with regional accents huddled around braziers?

The answer isn’t simply the crisis in Ukraine pushing out all other news. When the furlough scheme was wound up in September last year, the Treasury was still subsidising the pay packets of 1.1 million workers. Yet employment in the six months since then has risen by several hundred thousand to reach 75.6%. Moreover, for the first time, there are as many people looking for jobs as there are vacancies, with the latter hitting a record 1.318 million. Businesses and the Treasury are now confronting the problem of a labour shortage, rather than of mass unemployment.

Partially, the explanation for this lies with Brexit. Areas such as hospitality and agriculture which have previously relied on cheap staff from Eastern Europe have seen an exodus of cheap labour since we left Brussels behind. The pandemic did not aid this process, both by encouraging many to travel home to be with their families, and by keeping (through furlough) many workers who could have moved to fill vacancies in their former jobs. A happy consequence of this is that average earnings in the three months to January were 4.8% higher than the year before – the result of various firms paying extraordinary amounts to attract delivery drivers and the like.

Nevertheless, the continuing economic headache Sunak faces is highlighted by the fact that, despite wages rising by four times the rate they managed across the 2000s, once the Office for National Statistics adjusted for inflation and excluded bonuses, real wages have seen their biggest fall since July 2014. Against the rising cost of living, real-term pay was in fact 1.0% lower than a year earlier. A bumper bonus season in the financial sector may have meant that pay growth was up 6.5% for the 99th percentile, but the squeeze in real wages will hit those on lower wages genuinely hard this year.

The National Living Wage will rise by 6.6 percent in April – but with inflation already at 5.5% in January, and predictions that it would peak at 6 percent out of date, incomes will soon be squeezed across the economy. Inflation in double digits, spiralling energy bills, rising taxes and interest rates, a particularly noisy neighbour – today’s employment triumph may well be the best news the Chancellor gets for some time. That is especially as the ONS has stated that the inactivity rate stands at 21.3 percent, over a percent higher than pre-pandemic, since 500,000 or so workers aged 50 or over have dropped out – so unemployment does not have much further to fall.

Furthermore, today’s figures for Rishi Sunak comes with the bittersweet knowledge that tackling this economic quagmire will not only mean enduring the largest fall in living standards in 30 years, but will require unemployment to rise to help shake inflation out of the economy. Squeezed incomes will deflate demand and help bring the rate at which prices rise down – but the process is unlikely to be pretty. Still, the Chancellor’s time at Number 11 has so far been one crisis after another. He would be much too optimistic to hope for that changes now.