Two figures leap out from another remarkable set of upbeat labour market figures released this week.
The first is the relentless rise in the number of so-called “retired” folk in work. The number of those aged 65 and over who are still working continues to show the unbroken line of ascent it has maintained through the financial crisis, recession and long, slow recovery.
There are now 1,087,000 people over 65 in work, up 107,000 or 11 per cent on a year ago. The figure sets a new record and marks a rise of almost 200,000 in just two years.
We will have our own explanations for this phenomenon – difficulties in saving money for retirement, inadequate “pension pots”, fear of poverty in old age or perhaps that work is, after all, a social activity and we still value the companionship of those alongside us in work – at least some of the time. But the fact is that the whole nature and experience of “retirement” is changing – one of the biggest social changes of our age.
The second remarkable figure is the number of those in self-employment. Taking full-time and part-time self-employed together, between January to March 2013 and January to March 2014 the number of self-employed people powered up by 375,000 to reach 4.55 million.
By contrast, there were 5.51 million people employed in the public sector, down by 159,000 from September 2013 and down 203,000 from a year earlier. So how long might it be before the numbers of self-employed overtake those on the public sector payroll?
On any long-term view this is an astonishing state of affairs, barely conceivable in the depths of recession in 2009 and running totally counter to those long-aired concerns about the decline of enterprise and entrepreneurialism.
Now, with any figures like these there are big caveats and cautionary points to note. First, the decline in public sector employment has been heightened by the transfer of the Royal Mail payroll from the public to the private sector. And even if, as seems likely, the era of government spending constraint extends well into the future, there has to be a point at which the rate of decline in public sector employment starts to slow. Key services such as policing, security and education need to be maintained, while demographic pressures suggest that employment in healthcare and services is set for an inexorable increase.
The figures on self-employment reflect in some part the explosion in business formation. According to StartUp Britain, the number of new businesses launched last year hit an all-time record of more than 500,000. And the running total so far this year is already at 206,000.
Many of these are laptop entrepreneurs – taking advantage of the opportunities opened up by electronic communication and the internet to launch micro businesses. But attend a “networking” conference of new entrepreneurs and you will collect a large number of business cards from silver-haired “retired” sales managers, service sector executives, advisers and accountants who have been made redundant from formal organisations and who are keeping their hand in by setting themselves up as business consultants. In any business gathering, these “lone star laptop” tycoons can often out-number the number of genuine businesses. Many are working at a fraction of the salaries they enjoyed in previous employment with larger companies. And, of course, business start-ups have a very high attrition rate: more than two-thirds will fall away within two years.
Nevertheless, there can be little doubt that the internet has enabled many thousands of people to run viable micro businesses. Larger firms often prefer the flexibility (and lower cost) of outsourcing projects and functions to specialist self-employed providers – and in particular those with proven knowledge and expertise in their fields. Those that make the most of marketing opportunities and social media can reach a far wider customer market than setting up as a village shop or in a city centre office. Micro businesses, rather than formally hiring staff, engage in informal information and service exchange, creating a complex latticework of business activity.
Their creativity, coupled with adaptability, flexibility and the ability via the internet to reach customers at home and overseas, is emerging as another feature of social change. The economic importance of this is not in my view being fully captured by conventional GDP measurement. This may help explain why economic commentators, relying on official data from an activity universe that does not fully capture the numbers of micro business and their activity, have underestimated the strength of this recovery and been taken aback by the powerful upturn in employment.
And the upturn is undeniable. Latest estimates for January-March 2014 show employment continued to increase, unemployment continued to fall, as did the number of economically inactive people aged from 16 to 64. These changes continue the general direction of movement over the past two years.
There were 30.43 million people in work for January to March 2014, 283,000 more than for October to December 2013, and 722,000 more than a year earlier – helped by the surge in self-employment. The quarterly growth in employment is the fastest since records began. All told, there are now 72.7 per cent of people aged from 16 to 64 in work for January to March 2014, up from 71.4 per cent a year ago. And the pace of growth is unlikely to ease soon, with the number of vacancies now at 628,000.
Nor is there any evidence Scotland is missing out. There are now a record 2.6 million in employment – a rise of 1.7 per cent over the year – higher than the 1.3 per cent recorded in the rest of the UK.
The one institution with the problem is the Bank of England. Its “forward guidance” policy, ushered in with great fanfare barely a year ago, has been shot to pieces. Central to forward guidance was a clear indication that interest rates would not be raised until unemployment fell below 7 per cent – regarded then as a distant prospect unlikely to happen much before 2015, if then.
Now it has hit a five-year low of 6.8 per cent, governor Mark Carney has put a fresh marker down that interest rates will be on the move much sooner. Independent assessments reckon on an interest rate rise just before the general election next year. That may be of little cheer to the coalition government. But it marks a further stagepost on our recovery, far earlier than most had thought possible. And it owes much to the “oldies” still in work – and the rise of the laptop self-employed.