A Trip Down Memory Lane
Posted on Friday, October 28, 2016 by Memory Lane — No comments
If you remember these you will remember when unemployment was last this low!
Yes, Decimal Currency was about to send your Granny into a state of confusion from which she would never recover until she could work out what everything cost in 'old money'. The music industry was still recovering from the news that The Beatles had split and Benny Hill was topping the charts with 'Ernie - the Fastest Milkman in the West'. Both 'A Clockwork Orange' and 'Willy Wonka and the Chocolate Factory' were being released in the cinema and, bizarrely, trips to the Moon had become, sort of. run-of-the-mill.
In the meantime, the Government decided to keep records of the total 'Unemployed' in the UK. This was different from the number of people 'not working' because that included those unable to work and those who had no need to work. Unemployment was the total number of the workforce that were actively looking for work and claiming benefit due to unemployment. At the time this stood at about 4.4 per cent of the workforce.
Here in November 2016, it stands at just under 4.9 per cent.
This has a massive impact on the economy in a number of ways. Firstly, it ensures that GDP continues to grow month on month because, normally, people tend to spend most of what they earn in the High Street on food, clothing and a few luxuries - you'd be surprised at what the government term 'luxuries. GDP is not the be-all-and-end-all of economic performance but it goes a long way to indicate a healthy economy, along with unemployment and inflation figures.
Secondly, low unemployment leads to wage inflation. Surprisingly, this hasn't really happened at the moment and some economists are scratching their heads as to why not. The best guess is that, with price inflation still under control, workers are content to see their earnings flatline for a while - this cannot last forever.
Thirdly, high employment leads to a 'skills shortage' in the job market. This is being done to death by recruitment agencies who are trying to put the fear of God into businesses who need skilled workers but it is a fact that shouldn't be ignored. Shortage of skilled and unskilled workers, coupled with the restricted movement of European labour caused by Brexit could see companies competing for a workforce that shrinks even further by 2020.
Entrepreneurs, especially those who build successful start-up businesses, could find it difficult to execute their ambitious growth plans unless they can attract talent with the skills and experience to help the business expand.
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