Regular real pay remains below its pre-crash levels.
Unemployment has fallen slightly
Well, actually it has more than halved but OK.
UK productivity growth has flatlined since 2008
Yep, and ain’t it great that the Thatcher Revolution worked?
So, what is it that happened in the early 80s? No, not how it happened or why, but what? Correct, recession and soaring, soaring, unemployment.
So, what happened in 2008 and onwards? Recession and rising, not soaring, unemployment.
The loss in output was about the same each time. But in the early 80s unemployment rate went up to 11.7% (according to FRED). In the 2010 sorta period to 8.11. Why?
Because of the changes in the structure of the British labour market. Everything was much, much, more flexible. Therefore a fall in output – which is what a fall in GDP is – led not to everyone being turfed out on their ear. Instead of 12% of the population moving to zero income the paid was spread more widely. Everyone got a delay in the rise of their income – unemployment rose less.
Unless you think we’ve killed the business cycle this is to be applauded. In the bad times everyone takes a little slap instead of a few taking the full hit.
Great eh? The signal of the victory of the Thatcherite labour market being exactly that unemployment didn’t rise so much because wages fell.
Low productivity growth simply being the same thing, labour usage hasn’t fallen as output does.
Of course, given that this is Spud here the the victory is being claimed as a defeat.