Page last updated at 07:47 GMT, Wednesday, 19 August 2009 08:47 UK

How Wales bucks the jobless trend

Nick Servini graphic
By Nick Servini

Artist impression of the development in the Hayes
St David's 2 in Cardiff is creating an estimated 4,000 jobs

The BBC Wales business correspondent gives his latest assessment of the state of the Welsh economy.

Everyone agrees that a reduction in unemployment in Wales is welcome.

But not everyone agrees on exactly why unemployment is going down here at the same time that it's going up everywhere else in the UK.

First, let's go over the figures. For the three-month period until the end of June, unemployment in Wales stood at 108,000. That's down 2,000 on the previous quarter. Figures from the previous month show it was down 1,000.

Crucially, it's the only place in Britain where that's happening. The north east of England is considered fairly close to Wales in economic and social terms, and unemployment went up there by 25,000 over the same period.

Is it any coincidence that Wales is the only place in the UK with a wage subsidy scheme? The assembly government says it's prevented 5,500 people joining the dole queues.

That's a figure which is difficult to confirm, because we don't know for certain whether companies would have made those workers redundant if there hadn't been a wage subsidy scheme in place.

Despite this, there's still likely to have been some impact.

The employers' organisation the CBI says it's more likely to do with the fact that Welsh manufacturing got hit hard and early in the recession and now many of those businesses have seen things stabilise after a difficult few months.

Some say the St David's 2 development in Cardiff is having an impact in south Wales at least. An estimated 4,000 jobs are due to be created there, and about 1,000 have been working on the construction alone.

There's also the role of the public sector. We know there are likely to be cuts in the public sector in the future, but they haven't taken hold yet and that's offered significant protection. I suspect the answer lies in a combination of these, and other, factors.

There has to be a note of caution, though. The unemployment rate in Wales at 7.6% is only marginally lower than the average rate in England, at 7.9%. And over the course of the past year the number out of work has increased by 37,000 in Wales.

There are also the indications of how competitive it is to find a job at the moment. Acorn Recruitment in Newport, the biggest firm of its kind in Wales, says on average 100 people are going for every job it advertises.

Nevertheless there's been genuine surprise at the recent reduction in the unemployment figures. It started off as a blip but now appears to be marking the beginning of a trend.

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