3 min read

So is this full employment?

So is this full employment?
It all started with a question.
Why do our employment figures only go back to 1971?
After all, if the latest data released by the ONS is to be believed, the employment rate is now, at 74.1%, at the highest level on record.
But those records only go back 45 years. That might sound like a lot, but for most economic subjects we have data going back far earlier than that. The jobs market has always been of great interest to economists, so how does today’s labour market really compare with history?
Consider unemployment (the number of people out of work as opposed to in it). As you can see below, the unemployment rate of 5.1% is low, albeit still a bit above the most recent low in 2005 (4.7%) and the historic lows it reached in 1973 (3.4%).
Then again, this data series only goes back so far (well, 1971). If you look back longer in history, what does unemployment look like? Well, thanks to the Bank of England’s Three Centuries of Data spreadsheet, we know it looks like going back to 1871:
And of course, unemployment is only one measure of the health of the labour market; George Osborne has frequently said he wants to attain “full employment”. He’s been a bit vague about the definition; one explanation for it is “the highest employment rate in the G7”. By that measure he’s doing OK, but is still trailing behind Germany and Japan, but is catching up.
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But what about viewing employment in historical perspective? Remember, the  employment rate – in other words the number of people in work, as a percentage of the working age population – only goes back to 1971, at least the official database does. And while the Bank of England’s brilliant spreadsheet includes a series measuring the number of people in work, there’s nothing about the employment rate.
But it is possible to work it out yourself. All you need is to work out the number of people in work as a percentage of number of people in the UK between the ages of 16 and 64. But here, too, one runs into all sorts of problems. For the reason the official employment numbers only go back to 1971 is that is as far back as we have population by working age statistics.
Anyway, to cut a long story slightly shorter, it is possible to get hold of population numbers for 15-64 year olds in the UK between 1953 and 1971, and that results in the following chart:
For me, the surprising thing is that, on the basis of these admittedly back-of-an-envelope figures, today’s employment rate is actually considerably higher than it was in what is often considered the glory era for UK full employment – the 1950s and 60s.
In fact, the only times employment rates were higher was during the first and second world wars. So perhaps the message is that we are already in a period of “full employment”, back in a golden era for UK jobs. Well, provided you assume these are all real jobs as opposed to the famous non-jobs so many talk about these days.
On which basis, it is worth considering this following, final chart, showing you the percentage of jobs which are self-employed jobs. This is up to the highest level on record.
PS It’s also worth pointing out that if you take the employment rate for the whole population, eg not just those aged 16-64, it was higher in the 1970s than it is today.

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