Economists in the US, have signed a petition for a hiring tax-credit… so civilised. Brad De Long, professor of economics at UC Berkeley (and well-known blogger) has posted a draft letter from a bevy of reputable economists (including Joseph Stiglitz and Mark Zandi) asking Congress to implement “additional emergency policy measures to jump-start job creation.” Their preferred measure – a tax credit.
A well-designed temporary and incremental hiring tax credit is a cost-effective way to create jobs, and could work well in the current environment. At a time when GDP is beginning to rise and demand is starting to return, private firms are likely to respond to such a tax incentive by hiring sooner and more aggressively than they otherwise would have done.
Figures just out show the UK labour force is shrinking. The same happened last month.
Figures for January show employment is down from 28.921m to 28.905m, and unemployment is down from 2.458 to 2.457. The changes are slight enough to warrant three decimal places, and it should be noted that the change to employment are within sampling variability (+/- 129).
The rising number of economically inactive (“Not labour force” in the diagram, right) is largely driven by men. Many are becoming students, a 2.8 per cent rise on the quarter (4.3 per cent for men; 1.3 per cent for women). Many of those surveyed want a job but are excluded from the unemployment numbers because they haven’t been looking for work in the past four weeks, or those who are looking but unable to start in the next fortnight (Table 13).
Within unemployment, two trends are clear. First, claims for unemployment benefit are still rising. They are up 30 per cent on the year, rising more for women (37 per cent) than for men (28 per cent). The claimant count fell last month by 0.9 per cent, but have regained that ground this month, rising 1.5 per cent.
Second, the duration of unemployment continues to rise, with those seeking work for more than 12 months seeing the fastest rise in caimant count, up 9.2 per cent in the last month alone (Table 11(1)). Young claimants were by far the worst off, with claimants in the 18-24 age bracket rising 23.7 per cent in the month.
Official figures show Britain’s economy has contracted by almost 6 per cent this recession; the US economy by only 3.2 per cent. Yet the employment declines have been much smaller in the UK: OECD figures suggest British employment has fallen only 2 per cent , compared with 4.5 per cent in the US. As the chart from the Office for National Statistics shows, UK employment stopped falling around May this year, some seven months ago.
We have blogged frequently on these enormous transatlantic labour market differences. Ralph has explained the European Central Bank’s concern that short-time working schemes in continental Europe explains much of the difference, but that argument does not apply to the UK, where there have been no such schemes.
Fifty per cent of the Japanese public think the current interest rate is too low, even though almost 90 per cent of them consider current economic conditions slightly or very unfavourable. People’s views on the future of the economy are increasingly driven by personal or business experiences rather than by the media or official data – and their personal experience is increasingly negative: the survey suggests falling income levels, worsening household circumstances and rising fears over employment and working arrangements.
Jobs data looks healthy in Brazil and the square mile, but less rosy for manufacturing workers and journalists, although wage data may be good for those employed, whatever the sector. Commodities are ever more popular and gold could surge if China bans exports
Protectionism a likely US-China theme at the G20; domestic vs. imported inflation; the drop in US consumer debt explained; and continuing falls predicted for UK housing