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Has employment decoupled from the economy in the UK?

  • 13-10-2022 3:48pm
    #1
    Registered Users Posts: 12,076 ✭✭✭✭mariaalice


    The UK unemployment figure reached 3.5% from June to August 2022.

    On the other hand, the bank of England is spending billion rescuing the bond market so the economy is not in a great place yet unemployment is falling.

    Has the UK decoupled the inverse relationship between the employment rate and how the economy is doing?



Comments

  • Registered Users Posts: 7,582 ✭✭✭theteal


    Yes don't let the Tory tag lines of record unemployment fool you. The flip side is the bigger issue i.e. the massive shortage of workers.



  • Registered Users Posts: 9,381 ✭✭✭Yurt2


    Correction: There's a massive shortage of workers for sh*t work that doesn't pay to live.

    They can open the tap on immigration, but that's one of the factors that got them where they are in the first place (not exclusively, but we know where it sits in the sad Brexit story).



  • Registered Users Posts: 3,931 ✭✭✭joseywhales


    We are in a pattern here. You have a huge labour shortage which leads to wage inflation which leads to inflation which leads to wage inflation which leads to inflation........same in the US. The central banks have to break this vicious cycle, the only way to do that will be a massive recession and job loses, a kind of reset. It won't be pleasant



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  • Registered Users Posts: 9,381 ✭✭✭Yurt2


    Inflation of the sort we're seeing isn't generated by higher labour bargaining power alone. In fact, it's one of the smaller component parts of it (borne out by Federal Reserve research in the US)



  • Registered Users Posts: 12,076 ✭✭✭✭mariaalice


    You have read the post about real wages falling in the UK?



  • Registered Users Posts: 3,931 ✭✭✭joseywhales


    Ah you are right!

    I was thinking that the average corporation has about 2/3 to 1/3 split of labour costs/input, so the majority of this inflation must be coming from labour cost. But with real wages deflating, there's obviously a lot more to it, my bad.



  • Registered Users Posts: 12,076 ✭✭✭✭mariaalice


    I have family in the UK. It is a strange place in a lot of ways it's changed so much in the past 40 years, it's noticeably poorer than Ireland in some areas now, and in other areas fabulous wealth of the type, you don't see in Ireland, cities full of grimy chain restaurant and cheap takeaways I mean acres of them.

    Post edited by mariaalice on


  • Registered Users Posts: 28,007 ✭✭✭✭Wanderer78


    unfortunately we have implemented similar polices here to, but no where near as extreme as the us and the uk, its all coming to ahead now though, in most countries, including here, its truly showing itself here in relation to property, this approach is toast....



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  • Not the case at the moment. There is a massiveshortage of labour. The old raise unemployment to lower wage inflation won’t work. It’s the end of the 40year low inflation, low wage growth paradigm. How it ultimately plays out remains to be seen but we do stand to see a shift back in the fruits if economic output towards labour (workers) from capital (investors).

    Inflation will ultimately be halted by a real fall in asset values as interest rates rise and not through wage stagnation as there simply are not enough workers at the moment



  • Registered Users Posts: 6,365 ✭✭✭timmyntc


    real wages fall if inflation is greater than rate of wage growth - in a wage inflation spiral (not that we are in one) real wages still do fall overall.

    Inflation always wins out



  • Registered Users Posts: 2,620 ✭✭✭donaghs


    It shows the alternative "right-wing" view on immigration. i.e. bring more people in to provide a pool of labour and keep payroll costs down.

    Despite getting elected to do this opposite, there seems to be a push on the new government from supporters/donor for "extra immigration".

    Kwasi Kwarteng gives himself three weeks to come up with debt-cutting plan | Financial Times

    It not a headline story in itself, and you have to search for it in articles.



  • Registered Users Posts: 15,939 ✭✭✭✭banie01


    Kwasi's 3 weeks have ended very prematurely as he's been sacked. The markets have roundly rejected the free market libertarianism at the heart of the Tufton St/No10 shítshow.



  • Registered Users Posts: 23,246 ✭✭✭✭Dyr


    Not to worry, we're doing our best to catch up.



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