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International Compendium: Labour Market Theme

Released: 24 April 2014 Download PDF

Introduction

The International Compendium consists of three themes; Economy, Labour Market and Population. The purpose of the compendium is to bring together a selection of comparable statistics for the UK and other European and non European countries along with a series of charts and commentary. Comparisons are made at a number of levels throughout the compendium with a focus on European comparisons, as well as wider international comparison, for example G7 countries or individual countries from Europe and elsewhere. A data catalogue is also included for each theme that provides links to the sources used in the commentary as well as links to additional sources of information.

The compendium draws on a number of sources of information which include existing ONS releases and data from the Organisation for Economic Co-operation and Development (OECD) and Eurostat (the statistical office of the European Union).  The focus is therefore on existing published information and the compendium covers a broad range of information across the three themes. ONS intends to build on this initial version of the compendium to include further statistics and analysis. We would, therefore, welcome comments on the format and content of the compendium so that it can develop further over time.

In the labour market theme we bring together information on employment and unemployment, and wages.

Employment and Unemployment

The ONS Labour Market Statistics monthly release includes data published by Eurostat on employment rates and unemployment. Data from quarter 3, 2013 shows that employment rates of more than 70% are present in Germany, the Netherlands, Austria, Japan and the UK. The total for the EU is almost 65% as is the case for France, and the USA has a rate of 68%. (figure 1.1)

Figure 1.1: Employment rates as published by EUROSTAT: (not seasonally adjusted) (3rd Quarter 2013)

Figure 1.1: Employment rates as published by EUROSTAT: (not seasonally adjusted) (3rd Quarter 2013)
Source: Office for National Statistics

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Data on unemployment is also provided in the ONS labour market statistics release using data from Eurostat and other key economies. This shows that the unemployment rate in the UK for the period November – January 2014 was 7.2%. Monthly data from other EU countries for January 2014 shows that the EU as a whole had a rate of 10.8% with rates of above 25% in Greece and Spain and above 10% in Italy and France. Germany, the United States and Japan all have unemployment rates below that for the UK. (figure 1.2)

Figure 1.2: Unemployment rates as published by EUROSTAT (seasonally adjusted)

Figure 1.2: Unemployment rates as published by EUROSTAT (seasonally adjusted)
Source: Office for National Statistics

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ONS publishes estimates of employment by both nationality and country of birth. The estimates relate to the number of people in employment rather than the number of jobs. Changes in the series therefore show net changes in the number of people in employment, not the proportion of new jobs that are taken by non-UK workers. (figure 1.3)

Figure 1.3: Employment by nationality and country of birth, changes between October to December 2012 and October to December 2013, not seasonally adjusted

Thousands

Figure 1.3: Employment by nationality and country of birth, changes between October to December 2012 and October to December 2013, not seasonally adjusted
Source: Office for National Statistics

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Looking at the estimates by nationality, between October to December 2012 and October to December 2013:

  • the number of people in employment in the UK increased by 425,000 to reach 30.24 million,

  • the number of UK nationals in employment in the UK increased by 367,000 to reach 27.54 million,

  • the number of non-UK nationals in employment in the UK increased by 54,000 to reach 2.70 million.

These UK and non-UK estimates do not sum exactly to the total number of people in employment because some people do not state their nationality in their Labour Force Survey interviews.

The number of people in employment who were foreign born is higher than those who were foreign nationals as some people born abroad are UK nationals. For October to December 2013, 4.46 million people in employment were born abroad, 1.76 million higher than the number of non-UK nationals in employment. Looking at the estimates by country of birth, between October to December 2012 and October to December 2013:

  • the number of people in employment in the UK increased by 425,000 to reach 30.24 million,

  • the number of UK born people in employment in the UK increased by 276,000 to reach 25.77 million,

  • the number of non-UK born people in employment in the UK increased by 141,000 to reach 4.46 million.

These UK and non-UK estimates do not sum exactly to the total number of people in employment because some people do not state their country of birth in their Labour Force Survey interviews.

Youth Unemployment

Comparing the UK with other countries across the European Union (EU), the UK unemployment rate (21%) was lower than the EU average (23.5%), in the third quarter of 2013. However, the UK unemployment proportion (12%) was higher than the EU average (10%), in the third quarter of 2013. The highest youth unemployment rate was 58% in Greece and the lowest at 8% in Germany. Compared with the first quarter of 2008, when the major worldwide crash happened, Germany is the only country across the EU to have seen a fall in the youth unemployment rate.

The countries across the EU have different proportions of the population who are young people, and also the participation in education varies, which should be considered when comparing the unemployment rate. For example the unemployment rate in Spain stood at 57% of the labour force in the third quarter of 2013 but the proportion was much lower at 21%. So over half of young people in the Spanish labour force (employed or unemployed) are looking for work but out of the whole youth population, one in five young people in Spain are unemployed. (figure 2.1)

Figure 2.1: The youth unemployment rates of countries in the European Union for the third quarter of 2013 and the first quarter of 2008

Figure 2.1: The youth unemployment rates of countries in the European Union for the third quarter of 2013 and the first quarter of 2008
Source: Office for National Statistics

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OECD data for the G7

The quarterly unemployment rate in the UK averaged 5.1% over the 33 quarters to Q1 2008. This was broadly comparable to the United States, and lower than most other G7 economies.  The rate of unemployment in all G7 countries increased during 2008 and 2009, although the increase in German unemployment was small (see Figure 3.1). The UK’s unemployment rate increased from 5.1% in Q1 2008 to a peak of 8.3% in Q4 2011, a larger increase than most G7 economies other than the US.  Unemployment rates in France and Italy, which had been higher than the UK prior to 2008, had risen to 10.9% and 12.3% respectively by Q3 2013.

The US unemployment rate, which had been equal to the UK rate of 5.3% in Q2 2008, rose considerably faster and reached 9.9% in Q4 2009, but has since fallen back and is now lower than in the UK.  Japan and Germany have displayed markedly different trends. Japanese unemployment peaked at the relatively low rate of 5.4% in Q3 2009 and has fallen since to 4% in Q3 2013.  German unemployment was 11.4% in early 2005 and has been on a broad downward trend since then. Despite a small increase in 2009, this trend has culminated in Germany reporting an unemployment rate of 5.3% in Q3 2013, supported by some recovery in output and perhaps the impact of earlier labour market reforms.

Figure 3.1: Harmonised unemployment rates in the G7 nations from Q1 2000 to Q3 2013

Figure 3.1: Harmonised unemployment rates in the G7 nations from Q1 2000 to Q3 2013
Source: Office for National Statistics

Notes:

  1. Source: OECD

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In most G7 economies - apart from Italy and France - the employment rate was around 70% of the workforce prior to the 2008-09 economic downturn (see Table 3.1).  The UK’s employment rate was one of the highest among G7 economies, standing at 71.8% in Q4 2007.  It then fell to 69.4% by Q4 2011, but has since increased to 70.6% in Q2 2013.  This pattern of a fall in the employment rate by Q4 2009, followed by a gradual increase, is common to Canada, France, Japan and the US among the G7.  The largest employment rate percentage point fall in the G7 between Q4 2007 and Q4 2009 was experienced by the US (5 points), followed by Canada (2.4 points) and the UK (2.2 points).

Germany actually experienced a rise in its employment rate between 2007 and 2009, and its rate of 73.3% in Q2 2013 was the highest in the G7.  The US in contrast has suffered a fall of more than 4 points over the period since 2007. Employment rates have increased since 2009 in all G7 economies apart from Italy. Of the five G7 economies with employment rates of around 70% pre-downturn, the US is the only one whose rate remains below 70%.

Table 3.1: Employment rate, total employment as a proportion of the workforce aged 15 to 64 years' old

%
  Canada France Germany Italy Japan UK  US
Q4 2005 72.5 63.5 65.8 57.8 69.5 71.5 71.6
Q4 2007 73.6 64.7 69.4 58.8 70.9 71.8 71.6
Q4 2009 71.2 63.7 70.8 57.1 70.1 69.6 66.6
Q4 2011 71.9 63.8 73.1 56.8 70.6 69.4 66.8
Q2 2013 72.6 64 73.3 55.6 71.5 70.6 67.3

Table notes:

  1. Source: OECD

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Wages

Eurostat collects and publishes data on gross annual earnings in enterprises with 10 or more employees (in Euros). Figure 4.1 shows that annual earnings dropped off in the UK from 2008 – 2009 before recovering again in 2010 but not returning to 2008 levels by 2011. In contrast Sweden and Germany both saw a fall in earnings after 2008 but wage levels have risen consistently in subsequent years. Wage levels in Spain are significantly lower than the other countries shown in figure 4.1.

Figure 4.1: Average gross annual earnings in industry and services (Euros)

Figure 4.1: Average gross annual earnings in industry and services (Euros)
Source: Eurostat

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Eurostat also collect and publish information relating to the gender pay gap. The unadjusted Gender Pay Gap (GPG) represents the difference between average gross hourly earnings of male paid employees and of female paid employees as a percentage of average gross hourly earnings of male paid employees . The GPG, therefore,  gives the percentage difference in hourly wages between males and females – the higher the percentage, the wider the pay gap.  Figure 4.2 shows the GPG for selected countries between 2008 and 2012 and reveals that the highest pay gap is in Germany, followed by the UK and the Netherlands. In general terms the GPG has fallen over time in these countries but is rising in countries such as Italy and Spain even if the GPG is lower overall in these areas.

Figure 4.2: Gender pay gap in unadjusted form (per cent and selected EU countries)

Figure 4.2: Gender pay gap in unadjusted form (per cent and selected EU countries)
Source: Eurostat

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Eurostat publishes information on minimum wages and this refers to monthly national minimum wages as applied to the situation on the 1st of January each year. The national minimum wage usually applies to all employees, or at least to a large majority of employees in the country. Minimum wages are gross amounts, that is, before deduction of income tax and social security contributions. Such deductions vary from country to country. In some countries the basic national minimum wage is not fixed at a monthly rate but at an hourly or weekly rate. For these countries the hourly or weekly rates are converted into monthly rates. In figure 4.3 minimum wage levels in Euros per month are shown for selected countries. For the UK minimum wage levels fell between 2007 and 2009 but have risen in every year since up to 2013. This is in contrast to the other countries shown which have seen steady increases in the minimum wage over this period with only a slight decrease in the USA in 2013.

Figure 4.3: Minimum wages (Euro/per month): Selected countries

Figure 4.3: Minimum wages (Euro/per month): Selected countries
Source: Eurostat

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Real Wages

Measures of real wages take account of the effect of price inflation. Real wages are defined here as average annual wages per full-time and full-year equivalent employee in the total economy, adjusted for all items consumer prices. If a worker’s earnings are unchanged, rising prices mean that real wages are falling and the same income will therefore buy a smaller quantity of goods and services than before.  Figures 4.4 and 4.5 use consumer prices inflation to calculate real wage growth across the G7; 4.4 focuses on the pre-crisis period and 4.5 focuses on the economic downturn and post-crisis phase.

Figure 4.4 shows that the UK experienced consistently positive real wage growth prior to the 2008-09 economic downturn, resulting in cumulative UK real wage growth between 1999 and 2007 of 19%, the highest in the G7.  There was also notable real wage growth in France (11%), Canada (10%), and the United States (9%), with Japan (-5.6%), Germany (1.2%), and Italy (5%) experiencing smaller increases.

Figure 4.4: Real wage growth in the G7 nations, from 2000-2007

Figure 4.4: Real wage growth in the G7 nations, from 2000-2007

Notes:

  1. Source: OECD

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Figure 4.5 shows real wages in the UK falling markedly since 2007, by a cumulative 6.1% - the biggest fall in the G7.  At the same time, real wage growth was mainly positive for Canada (4%), France (2.8%) and Germany (3.1%).

Figure 4.5: Real wage growth in the G7 nations, from 2008 to 2012

Figure 4.5: Real wage growth in the G7 nations, from 2008 to 2012

Notes:

  1. Source: OECD

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These trends point to differing economic conditions across the G7 countries. The notable fall in real wages for the UK compared with the US suggests that the labour market adjustment following the downturn has perhaps taken place more on the wages side for the UK – with nominal wage growth being less than the rate of inflation – and on the employment side for the US, with a notable increase in the unemployment rate.  The picture of labour market adjustment in the other G7 countries varies considerably, with Japan showing little change in the pattern of falling real wages from that prior to the downturn, while France and Germany have both experienced rising real wages since 2008.

Background notes

  1. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

Content from the Office for National Statistics.
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