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. Read more
There is a flipside to the diverging unemployment trends in US (up, sharply) and eurozone (up, relatively modestly) about which we have blogged frequently on Money Supply. The European Central Bank’s monthly bulletin today highlights how productivity trends have also diverged – see the chart on the left. While the US has maintained productivity growth rates in the pre-crisis range, eurozone productivity has fallen.
There is one obvious explanation. Government-sponsored short time working schemes in Europe have enabled companies to keep on staff, even though production has fallen steeply. But the ECB says the story of US/eurozone divergence holds true whether productivity is measured per person employed or per hour worked, and argues that the eurozone has been weaker at investing in productivity enhancing technologies. Read more
The US will have a jobs rich recovery while Europe will have a jobless one. That is the unspoken conclusion of the OECD’s latest Economic Outlook, writes Chris Giles of the Financial Times. It uses some wonderful charts as evidence for its case. Read more
“Low rates of resource utilisation.” That was one of the three factors the Fed has identified as preventing a rate rise for at least six months. With unemployment now at 10.2 per cent, and probably peaking nearer 10.5 per cent, “resource utilisation” is unlikely to be the trigger for an early rate increase. Indeed, if unemployment alone decided interest rate policy, we could see near-zero rates for a very long time: Fed unemployment forecasts are about 8 per cent two years from now. Read more
UK labour markets are behaving more like the eurozone average than the US, writes Ralph Atkins in a blog for the Financial Times Read more
Unemployment has surged in the US, but hardly risen in parts of Europe, where the fall in output has been larger. Obviously, this means European productivity has fallen through the floor writes Chris Giles of the Financial Times, but the outlook for jobs in the recovery is bad everywhere. Read more
US workers have suffered far more job losses than their European counterparts in this recession even though output has fallen further in Europe. It raises the intriguing possibility that Europe is now home to more flexible labour markets, writes Chris Giles of the Financial Times Read more