Briefly, a large number (around 3% of the working-age population) of the long-term unemployed in the UK left the labour market for sickness/disability benefit and are no longer counted in the unemployment stats. My beef is against the use of unemployment numbers as weapons in the non-stop "US/UK good, France/Germany bad" propaganda game. ("Just look at our low numbers, theirs are much higher, therefore their economies are failing etc...")
In fact, though, the UK may well have had the tight labour market that, as Drew says, wage growth suggests. But two contributory factors not generally recognized are the number of long-term unemployed taken off the market and supported at public cost, and the large-scale creation of public-sector jobs. I'm not knocking this, or suggesting Brown isn't a capable Chancellor; but under-the-radar Keynesianism it is.
The truth is that there is little difference in government spending as a percentage of GDP in all four countries. It's one of the reasons for why I can't take American Libertarians seriously when they bitch about "the hand of big gov'mint". Government really isn't that big, even in Germany and France, which is fine by me, as someone who, I think like most people, only wants government to do what it must do for the sake of society's health and safety. Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
