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Growth and Jobs


Growth creates jobs! In the long term, for an economy to generate employment opportunities to absorb an expanding labour supply, requires sustained growth in real national output.


The positive relationship between output and employment exists because labour as a factor input is a derived demand. People are employed for the output they are required to produce. If a country can raise the average rate of growth of real national output it stands a much better chance of a permanent fall in unemployment and a rise in economic activity. Some nations manage this better than others.


The United States stands out over the last four years for its employment-creation record. The national pay-roll has expanded by more than 1% in each year since 1995.—not least because real GDP has grown by over 3% per year on average.  The UK has a favourable record on new jobs created. Even in 1998, a year of cyclical economic slowdown, employment grew by 1.2%, bringing unemployment down to a twenty year low. Most new jobs are concentrated in the service sector—manufacturing employment is contracting.



E-mail Steve Margetts