Wednesday, 17 October 2012

UK people wanting work and vacancies - Aug 2012

People wanting work

The ratio of people out of work wanting work to vacancies

The UK participation rate.

This is the ratio of those 'in the labour force' (ie unemployed and employed) to the household population. It differs from the ONS's 'employment rate' in that it doesn't exclude those over 65 (although over 65s who want a job are still classed as 'retired').

Source: Office of National Statistics, tables MGSC (ILO Unemployment Level Ages 16-64 - Quarterly seasonally adjusted), LFM2 (Inactive - wants a job - Quarterly seasonally adjusted), YCCX (Part time workers - reason for working part time, could not find full time job - Quarterly seasonally adjusted), AP2Y (All vacancies - Quarterly seasonally adjusted), MGSL (LFS Household Population - all aged 16 and over - Quarterly seasonally adjusted) and MGRZ (Employment Level - all aged 16 and over - Quarterly seasonally adjusted).


Ben Johannson said...

Well obviously those people who "claim" to want work aren't being flexible enough with their wage requirements. If they really wanted a job they'd accept a wage of zero, but the greedy layabouts only care about money.

Neil Wilson said...

"If they really wanted a job they'd accept a wage of zero, but the greedy layabouts only care about money."

(i) To claim a job there has to be a job. The vacancies to demand ratio is 10:1 at the moment.

(ii) You cannot live on zero wages. So supporting that is the same as supporting a policy of extermination of the excess population that cannot obtain a 'living wage' job.

(iii) Prices do not adjust downward due to wage drops. Production simply doesn't happen - because there is no demand signal from spending.

Ben Johannson said...

Mr. Wilson,

People are always inherently rational in their decisions unless their decisions disagree with the model, in which case they are irrational and can be completely ignored. When this occurs people are being rationally irrational, and are interfering with the inherently rational ability of markets to clear rational unemployment of people who are refusing to be rational.

So although markets are perfectly efficient (and rational), people who refuse to follow the proper models when looking for work prevent the labor market from being efficient, a condition arising only when governments take rational but irrational actions like establishing a minimum wage. Rational markets are thereby forced into irrationality and unemployment is created.

Isn't this obvious?

Neil Wilson said...

"Isn't this obvious?"

It was obvious to the apartheid regime that people of different races should be separated.

It is always obvious to those with deeply held religious beliefs that the problems is with others who do not hold those beliefs.

Which very rapidly and quickly moves into the belief that those who do not follow the 'true path' should therefore be eliminated.

There are no rational markets in the real world. Humans don't have the compute power to make choices in that way. They do not clear automatically. They do not function automatically.

Systems will only work if they work with people as they are and with the facts as they are. And that is if you want to stick with a work = income = resources model then you have to make sure there is enough work and that work delivers enough income to live.

It doesn't happen automatically however you set it up. Because market magic is just that - a fairy tale.

Anonymous said...

Looks like the Treasury has been reading your blog:

Anonymous said...

Ben Johannson should probably start his economic education by reading "Debunking Economics" by Steve Keen.

Anonymous said...


Any idea what this means?:

"the Bank's governor, Mervyn King, pointed out that, because of the way that the APF functions, the Treasury may well end up having to repay the cash, and more, in future.

This would occur if the Bank of England raised its own interest rate - which it uses to set monetary policy - to a level where it was paying more interest on its own borrowings than the AFP was earning on the government debt it holds."

What and why does the BoE borrow?

Are they talking about interest paid on reserves?

Neil Wilson said...

BOEAPFF - the BoE subsidiary that operates QE - borrows money from the Bank of England to do QE.

It pays interest on that loan at the Bank Rate - 0.5%.

If the Bank of England raised rates to, say, 4% then BOEAPFF would pay 4% on that loan to BoE. That may trigger the 'indemnity' that requires HM Treasury to make good the difference.

Of course that 4% would then go to the Bank of England proper, who would pay it back to HM Treasury as the Bank Dividend...

So Merv is being slightly disingenuous in saying that it will cost HM Treasury in the future on the interest side.

It would only 'cost' if and when BoE decided to shrink its balance sheet - in that the DMO would have to issue more Gilts to drain sufficient cash to clear the loan.

y said...

but wouldn't raising Bank rate involve shrinking the BoE balance sheet anyway?

Neil Wilson said...

Not necessarily. It depends on the policy.

The scales may fall from their eyes and they may realise that interest on reserves is the same as issuing Gilts.

y said...

Perhaps, but they'll probably still think that they have to get the money to pay IOR from somewhere, rather than just magicking it out of nothing.

Isn't that how CBs currently pay IOR? i.e. they 'take' income from govt bonds and loans and 'recycle' it into IOR?

Or do they just create the IOR ex nihilo?

Neil Wilson said...

It's always created ex nihilo. They just mark up the accounts.

If they get excited about it there'll just be less transmitted to HM Treasury via the dividend.

Which then would require, under the current rules, more Gilts to be issued.

So it would all balance out. They are just paying themselves.

y said...

Yes they're paying themselves, but the linguistic game is set up in such a way that all the negative terms (debt, deficit, etc) are inevitably attached to the treasury.

Do you think that there might be some element of age-old conspiracy to all of this? I mean, how is it that the issuer of the currency ended up being referred to as the country's "most irresponsible spendthrift" and "debtor"?

Is there something deep and dark going on here, or is it just a case of mass ignornace and stupidity?

Neil Wilson said...

Never ascribe to conspiracy what can reasonably be explained by cock up.

Nell said...

"The chancellor said he wanted the £35bn that would have been accumulated by the end of the 2012-13 financial year to be paid in staggered payments. source
Is this the 'rainy day' fund you mentioned in a number or earlier posts?

Neil Wilson said...

It is indeed. Seems the rainy day has turned up and he's decided to use it to boost his own credibility rather than helping the general population staring down the barrel of a 'triple dip recession'.