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Ian Brinkley

Divergence of GDP and labour market cannot continue

Authors: Ian Brinkley Ian Brinkley

15 August 2012

Commenting on today’s labour market statistics, Ian Brinkley, director at The Work Foundation, said:

“These figures are very good indeed – and almost impossible to explain. The economy has been contracting for at least six months according to the official statistics. Yet the private sector is still hiring people in large numbers. Moreover, many of the new jobs are full-time and permanent. If we were just looking at the labour market, we would say the UK is on track for recovery rather than being in the double dip recession shown by the GDP figures.

“Some may be tempted to see this as a short-term Olympic effect because many of the new jobs were in London (although the statistics only cover the period up to June, and regional figures are much less reliable than the national statistics). We are less convinced. Employment grew just as strongly in the North West. Moreover, nationally there was only a modest increase in temporary jobs. Finally, if the economic statistics are right and overall economic activity across the UK is falling, then any temporary boost in London has been balanced by falls elsewhere, leaving the national picture unchanged.

“The more plausible explanation is that firms are holding onto their existing people because they do not want to risk losing valuable skills, although this does not really explain why employers are still expanding their workforces.

“On balance we still expect the labour market to go into reverse in the next few months, especially if the Eurozone economies continue to contract. But if the UK labour market goes on apparently defying economic gravity, we also need to take a hard look at whether the current GDP statistics are giving too pessimistic a view of the UK economy.”



Notes to editors


  1. Ian Brinkley is available for interviews, briefings and written comment.
  2. The Work Foundation aims to be the leading independent, international authority on work and its future, influencing policy and practice for the benefit of society. The Work Foundation is part of Lancaster University – an alliance that enables both organisations to further enhance their impact.


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