National Minimum Wage

at the distribution of earnings, the coverage of the minimum wage and the bite of the
minimum wage (that is, the minimum wage as a proportion of a particular point on the
earnings distribution, such as the median or lowest decile). We examine these in more detail
in Chapter 2. Having considered earnings, we now look in detail at what has happened to
other aspects of the labour market.
Employment and Unemployment
Chapter 1: The Economic Context to the October 2011 Upratings
1.30 The OBR and independent forecasts at the time of writing our 2011 Report suggested that
the improvement in the economy in 2011 would lead to employment growing by around
0.3-0.4 per cent but that this would be less than the growth in the working age population so
that the unemployment claimant count would rise to 1.56 million from 1.47 million. The OBR
was more optimistic than the general consensus and forecast that the claimant count would
reach only 1.49 million in the fourth quarter of 2011.
1.31 We commented in our 2011 Report that the labour market had been remarkably resilient
throughout the recession and that, over the year to September 2010, the numbers in
employment and total hours worked had increased while unemployment on both claimant
count and ILO measures had fallen. But we did highlight concerns about the performance of
the labour market: the growth in employment had been concentrated among part-time and
temporary employment; the number of employee and workforce jobs had fallen over the
year; and vacancies had weakened (and redundancies had started to pick up) since the
summer of 2010.
1.32 As noted above, economic growth has not met expectations in 2011. Perhaps surprisingly
in view of this, workforce jobs increased as forecast by 0.3 per cent, since growth in selfemployment
has made up for the loss in employee jobs. This was the first increase in the
year to September since 2007. However, Table 1.5 shows that other measures of
employment suggest the labour market was not as strong.
1.33 Between September 2010 and September 2011, total employment fell by 109,000 (0.4 per
cent) with the number of employees falling by 130,000 (0.5 per cent). The total number of
hours fell by 0.8 per cent, more than the percentage fall in employment. The falls in these
Labour Force Survey (LFS) measures of employment followed a year when the labour market
appeared to have recovered from the recession.
1.34 Both ILO unemployment and the claimant count increased in the year to September 2011.
After falling by 149,000 in the year after the recession ended, the claimant count rose by
125,000 in the year to September 2011 to reach 1.59 million. This was higher than both the
OBR and median of independent forecasts. ILO unemployment rose by 165,000 over the
year to September 2011 to 2.6 million.
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