UK ‘jobs gap’ could close tomorrow

Strong overall job performance with London and the North East surging ahead

Official figures published tomorrow could show that the six year old UK ‘jobs gap’ – the difference between the pre-recession employment rate (73.02 per cent) and the current rate (72.97 per cent) – could finally close, according to a new analysis published today (Tuesday) by the Resolution Foundation.

While the absolute number of people in work has long since surpassed its pre-recession level – a record 29.5 million people aged 16-64 are currently in work, 620,000 more than in May 2008 – much of the UK’s employment growth is down to an expanding population. The UK employment rate – the likelihood of someone being in work – has taken far longer to recover.

The Resolution Foundation has tracked the UK ‘jobs gap’ for 16-64 year olds that has emerged since the start of the downturn. Rapid employment growth over the course of the last two years has brought the gap down from a peak of over 1.1 million in November 2011 to just 19,000 in July 2014. ONS figures published later this week could show that the UK employment rate has finally surpassed its pre-downturn level, with the national jobs gap closing completely.

However, the analysis suggests an uneven picture across the nations and regions of the UK, with some areas already having higher employment rates than before the downturn, and others still experiencing significant jobs gaps. However, the strong overall recent labour market performance means that every part of the UK is now heading in the right direction, with some making far quicker progress than others.

Of the five regions that have closed their jobs gaps, London has the best recent employment record.  Here the gap was closed back in November 2013, and the capital now enjoys an employment rate 2.3 per cent above its pre-recession level – equivalent to 90,000 extra jobs.

But it’s not just a case of London surging ahead, the analysis also shows that the North East has recorded some of the most rapid gains in employment in recent years. Despite entering the downturn with one of the lowest employment rates in the UK, the region has had the joint second strongest employment performance over the last six years (along with the East of England), narrowing the gap between it and the rest of the UK.

Yorkshire and Humber, the East Midlands and the East of England also have higher employment rates now than before the downturn.

However, seven of the UK’s 12 nations and regions still have a jobs gap to close. Northern Ireland, the North West, Wales and the West Midlands have suffered the double whammy of having lower employment rates than the UK average on the eve of the downturn and poorer recoveries – relative to other areas of the UK – in recent years. The ‘low and sluggish’ employment record of these regions is a cause for concern, says the Resolution Foundation.

The South East has the single biggest jobs gap of any region, having the equivalent of 65,000 fewer jobs compared to its strong performance before the downturn. However, the region still has the second highest employment rate of any region or nation in the UK, having been overtaken by the East of England during the downturn.

While gaps remain in some areas, the pace of recovery has picked up across the country over the last two years.  Some regions have surged ahead, with London’s employment rate improving by an impressive five per cent. In Wales however, progress has been sluggish, with the employment rate rising by just 0.2 per cent.

With people living and working longer, the Resolution Foundation argues that it is important to consider the employment rates of everyone aged 16 and above (as well as the 16-64 year old measure that is typically used) as the 65+ year old workforce is likely to form an increasingly important measure of labour market performance. Under this alternative approach, 370,000 jobs are still needed to close the jobs gap for the UK’s expanding and ageing workforce. All regions except London and the North East are still carrying a jobs gap on this 16+ measure.

Laura Gardiner, Senior Research and Policy Analyst at Resolution Foundation, said:

“This week should mark another milestone in the UK’s labour market recovery, with its six year ‘jobs gap’ finally closing. The strong employment growth in the UK as a whole is very good news and has far exceeded expectations, particularly as it has been broadly spread across the country over the last year or two. But some areas are clearly doing better than others.

“The experiences of Northern Ireland and Wales, where employment levels remain below average and growth rates lag behind those recorded elsewhere, look very different to those enjoyed in the high-employment, high-jobs growth areas such as the East of England and the East Midlands.

“As well as increasing the rate of employment growth in regions that are lagging behind, we need to ensure that the jobs driving this employment recovery are of a high quality and not short term, unstable and low skilled.”

The Resolution Foundation analysis is published ahead of a major new labour market project, which is being launched next week (Tuesday 21 October) with new analysis on the state of the labour market. The research will be launched at an event that will include a keynote presentation from Professor John Van Reenen, Director of the Centre for Economic Performance at the London School of Economics.

1. Further information about the event to launch the Resolution Foundation’s new labour market project is available at resolutionfoundation.org/events/bigger-stronger-riskier-poorer-understanding-the-new-post-crisis-labour-market
2. The Resolution Foundation is an independent think-tank which works to improve the lives of people on low to middle incomes.
3. Follow us on twitter @resfoundation

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For more information contact: 

Rob Holdsworth (Director of Communications) on 020 3372 2959 or 07921 236 972

Natalie Cox (Communications Officer) on 020 3372 2955 or 07983 550 337