The latest Labour Market Statistics have revealed that annual 2.7 percent pay growth since 2007. Employment has also risen with 400,000 more people in employment than a year ago, unemployment continues to decrease.
Commenting on the latest ONS Labour market statistics, Mark Beatson, chief economist at the CIPD, the professional body for HR and people development, believes the pay growth will be short lived. He says:
“We’re finally starting to see some positive movement on wages, but this spike in real pay growth may well be short-lived, particularly as it is likely we’ll see inflation rising again later this year. Of greater concern is that we are still not seeing the productivity growth required to make real pay rises sustainable. Output increased by 0.3% in the first quarter of 2015 and total hours worked in the three months January to March increased by 0.2%, which suggests that the labour productivity figures for the first quarter of 2015, due out on 1 July, will show very slow productivity growth at best.
“Employment is still rising, but the growth rate is starting to slow. Job vacancies are up by 82,000 on last year and our own survey, indicates that three-quarters of organisations have struggled with recruitment challenges in the last year, particularly when filling skilled or niche roles. Getting people into work is just half the story. This must be balanced with ongoing investment and development to equip people with the skills they need to contribute to businesses for the long term, keeping both businesses and individuals competitive.
“Now is the time for businesses to balance their recruitment efforts with up skilling their workforces and creating an ongoing learning culture in work. We urgently need the government to recognise the importance of getting skills back on the agenda as part of its promise to create a budget for productivity next month.”
Commenting on the latest ONS employment figures, Julia Kermode, CEO of FCSA thinks the government should be focusing on the changing dynamics of the workforce. She says:
“It is encouraging to see that the UK’s workforce is sitting comfortably above 31 million and unemployment is low at 5.5% but of rising significance, both in terms of numbers and the strategic nature of the work performed, is the UK’s contingent workforce.
“It is notable just how important contingent working is to both the youngest and oldest UK workers and how stark the growing need for people to find more hours of work has become. Contingent working will increasingly become the means through which to satiate this demand.
“As the dynamics of work is changing it is more important than ever that the Government acknowledges these trends, keeps pace with change and works harder at supporting this flexible contingent group of workers rather than penalising them with unhelpful and prohibitive legislation. This sizeable and strategically important group of workers contribute hugely to the UK economy and should be recognised and valued.”
Andrew Hunter, co-founder of Adzuna, believes we need to focus on getting the right people for the positions to continue pay growth. He comments:
“The labour market appears to be gliding along smoothly. But beneath the surface, the legs of the jobs market are still paddling furiously. Advertised salaries have started to plateau, suggesting the recovery may be slowing down, while inflation is starting to creep up again. And a skills shortage is dampening the recovery in sectors like IT and Manufacturing.
“The next flood of applicants are about to join the workforce – as grads finish their courses and start their careers. At the other end of the workforce, older workers are keen to stay in their positions for longer. Though unemployment has fallen, the workforce isn’t operating at full capacity. There is still plenty of give for workers to contribute more.
“The challenge is to match candidates to the roles that suit them most, and train up workers to meet the needs where we are lacking. Apprenticeships will help the reskilling of current employees, keeping them in the workforce for longer, as well as helping train fresh talent. As unemployment falls, we need to use our workers wisely to maximise our productivity. That will set off a chain of significant salary growth at last.”