Bill Jamieson: Employment figures belie the reality

The wet weather has seen many outdoor projects brought to a halt this winter

Planning some building work? A room extension, perhaps? Or a garage? Take a tip: lie down until the mood passes.

I’m looking out this morning on a heap of rubble at the edge of the driveway. It should be a garage with a wee room on the end and a tool shed. Work began 11 months ago. It seemed simple enough.

Today the front garden is a quagmire of drainage pipes, bricks, panelling, planks of various dimensions, a skip full of rubbish, a portable toilet … and for months a building shell.

It’s been dogged by poor weather, long delays in materials, a five-month wait for door windows (these, startlingly, from Poland, finally arrived last week, but hey, without handles) – and lack of available labour.

Throughout all this, the architect, with that glazed, trance-like expression bred of watching too many Grand Designs, pops round with uplifting updates, a pad full of more drawings pulled from his Louis Vuitton man bag and a grin so fixed I fear he is stricken with lockjaw.

He is demented with visions. There is really no job so simple that an architect cannot complicate. The very rumour of his visit brings forth a cataract of unprintable mutterings from the site manager – more often the only one on site.

Building is no longer simple. Explanations for assembling the windows came not only with a video from the manufacturer but a set of impenetrable drawings.

The site manager tried to talk me through them last week. He would have fared better explaining the Hadron Collider to a baboon.

Today the site is silent: no hammers, no drills, no sawing… just the sound of rain dripping in where the doors and windows should be and turning the site into a sludge of mud and building waste.

I look out on the flapping polythene sheeting and the space for a back door that leads … to a plunge to nowhere. A Scandi-noir drama could not be more bleak. All it lacks is Sarah Lund poking a decomposing corpse.

The finishing date is pushed back – yet again. But should I be depressed? Absolutely not. For this fits a picture of strangely upbeat news.

Labour shortage is something we should cheer. The business pages may be telling us of plunging stock markets, a slowing economy, growth forecasts slashed, doom and gloom – but the great employment surge continues – if not on my garage.

Figures yesterday showed that, far from lengthening dole queues, unemployment is down again – and numbers employed are at record levels. My forlorn garage is not a cause for misery but proof positive of a healthy economy – nae builders, we’re booming!

Is there not a disconnect between the gloomy economic commentary and these labour market statistics?

Let’s recap. Unemployment in Scotland fell by 5,000 in the three months October to December. Numbers employed rose by 22,000 over the period and now stands at 2,636,000 – a new record high.

I remember years ago being told by former first minister Alex Salmond that the one economic measure that really mattered to him was unemployment. On that I certainly agree with him.

As for the UK overall, the picture is equally upbeat. Unemployment fell by 60,000 over the period, with the 5.1 per cent rate maintained at a decade low.

More than 31.4 million people are now in work in the UK, up by 205,000 and the highest figure since records began in 1971. The gain is exclusively in private sector employment.

Alongside this there was also a sharp rise in average hours worked per week (now at 32.2). The result is that total employment growth in hours worked was a remarkable 1.7 per cent in the fourth quarter. This is the third strongest reading on record. So on the employment side, the labour market does appear to be booming.

But it doesn’t mean I’ll have more hands on the garage project any time soon. The ONS statistics also show that there were 776,000 job vacancies in the three months to January – some 45,000 more than for a year earlier and – yet again – the highest since comparable records began in 2001.

I’m left wondering whether the site manager on his own will be able to see the work finished before he retires. But here’s another reassuring statistic: the number of over-65s in work continues to climb – up by 74,000 on the same period a year ago and at 1.2 million, yet again the highest figure on record. I may have to fork out for a Zimmer frame for him to see the project through.

What explains this strange disconnect between these labour market numbers and the pessimism that has gripped financial markets in recent weeks? Business page readers have been bombarded with data such as weaker than expected industrial production numbers and gloomy assessments on the world economy all pointing to slowdown.

It used to be said that because unemployment statistics were a “lag indicator” they should not be taken as an accurate guide to current economic performance. But these numbers are well up to date, and in Scotland include the painful labour shake-out in the North Sea oil sector.

The numbers are even more resilient bearing in mind the wet winter weather that will have brought many outdoor projects to a halt. Nor can it be explained away as a one-off, temporary rise. Unemployment has been falling for an extended period. And Global Insight chief economist Howard Archer expects the number of jobless to continue trending gradually down over the coming months, taking the UK unemployment rate down to 4.8 per cent by the end of 2016 and to 4.5 per cent in 2017.

But there is one outstanding feature in the latest numbers that dampens euphoria about this “good news” story. Growth in earnings is still slow. And there are continuing concerns about productivity – higher numbers in work does not mean we are producing goods and services any more competitively.

While the employment rate continues to hit new highs, earnings growth remains subdued and well below the recent peak of mid-2015.

Average weekly earnings for employees across the UK rose by 1.9 per cent including bonuses and by two per cent excluding bonuses compared with a year earlier.

Should not a tighter labour market be working – as it historically has always worked – to exert upward pressure on pay? In some sectors, companies are finding it hard to get the skilled and experienced workers that they need. But it looks as if prolonged low inflation has been working to limit pay awards. Annual average earnings growth is still above consumer price inflation of 0.3 per cent in January pointing to decent consumer purchasing power.

Other factors may be at work including a change in the mix of employment growth towards more lower-paid jobs.

But whatever the reason, we should count our blessings more than we do – if not for a garage project crying out to be finished, and badly needing more hands on deck.