More full time jobs created due to ´squeeze on pay levels´

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Commenting on the latest official labour market data, showing that employment rose by 155,000 and unemployment fell by 18,000 in the three months to August:

TUC General Secretary Frances O’Grady said: “While it’s good news that unemployment is still falling and more jobs are being created, there is still plenty to be worried about. Young people are being excluded from the recovery as youth joblessness remains close to a million. The government must admit its Youth Contract is failing and introduce a job guarantee to stop thousands more joining the dole queue.

People’s pay packets continue to fall in real terms. Earnings growth has never been lower and the longest wage squeeze in over a century is becoming even tighter. There is also a record number of under-employed workers who aren’t able to find full-time work. We need more high quality jobs and proper pay rises if this recovery is to begin to feel real for hard-working people.”

Neil Carberry, the CBI’s Director of Employment and Skills, said: “Today’s figures suggest that the more positive economic outlook is beginning to flow through to the jobs market. However, overall unemployment remains high. It is really encouraging that today’s increase in employment is almost entirely driven by a rise in full-time work and that long-term unemployment has begun to drop. However, it is clear that pay restraint is underpinning employment growth so we must ensure that minimum wage policy continues to reflect the wider labour market to ensure people aren’t priced out of opportunities to work.”

Nigel Meager, Director of the Institute for Employment Studies, said: “Today’s labour market statistics from ONS contain broadly good news. After several months with all the main indicators moving in a positive direction, it’s now safe to say that economic growth is, at last, starting to feed through into the UK labour market. Compared with this time last year, employment is up by 0.9%, the headline unemployment figure is down by 1.6% (and the claimant count by a much larger 13.7%), while job vacancies are up by 11.9%.

“But there’s still a long way to go, with unemployment at 2.4 million, over 800,000 more than at the start of the financial crisis in 2007. One feature of the recent downturn has been that employment and unemployment have been much less sensitive to GDP changes than in previous recessions.

On the positive side this means that the labour market wasn’t as badly hit as economists expected: employment held up better than before, with more of the hit being taken by reduced working hours and real wages. The flip side of this coin is that those in work have experienced an unprecedented squeeze in living standards. But it also means that employment will be less responsive to GDP in the upturn, so we can expect the current improvement to be the start of a fairly ‘slow burn’ jobs recovery.

It is interesting to note that while employment increased by 0.9% in the last year, the number of hours worked in the economy grew faster (by 2.4%). Many employers can respond to the upturn without a proportional increase in the number of people employed, simply by increasing the working hours of their existing workforces, many of whom are keen or desperate to increase their working time. The recent controversy over zero-hours contracts is a further symptom of this, and the number of involuntary part-time workers (who’d prefer a full-time job) remains at an historical high.

Finally, today’s figures confirm that the ferocious squeeze on real pay levels continues. There is huge pent-up pressure for wage increases in the system. As the recovery proceeds, employers may find it harder to resist this pressure, and any wage catch-up will further dampen any positive impact of growth on employment levels.”

CIPD Chief Economist Mark Beatson said: “Today’s headline figures continue the pattern of recent months. Increased confidence in economic growth is feeding through to the labour market.  Recruitment is up and the official number of vacancies is at its highest level since the autumn of 2008. The number of people employed grew by 155,000 in the last quarter yet there is no sign yet of increased demand leading to higher wages across the board- indeed, average earnings in August were unchanged from the previous month and the annual growth rate for the last three months is just 0.7%, two percentage points below the current rate of inflation.

“However, the number of people unemployed on the headline measure is hardly moving at the moment. In part this is because the population is growing. The number of people who are inactive has also fallen again, which increases the labour supply, and there are now 63,000 less people inactive because of long-term sickness than there were a year ago. But unemployment does appear to be on the way down; the headline measure is moving very slowly whereas the claimant count fell by 120,000 between June and September.

“Hopefully, some of this difference might be timing – the claimant count is more up to date than the headline measure.  But youth unemployment remains stubbornly high, and long term unemployment has only just begun to fall, so there is a real need to step up efforts to ensure our young and long term unemployed aren’t left out of the labour market recovery. Employers and government both recognise this. But the need for greater urgency was emphasised by last week’s OECD Skills Survey, which reminded us that the UK needs to raise its skill levels across the board to remain competitive – especially for those with weaknesses in literacy and numeracy. These are long-term problems that will not be solved by economic growth alone, but instead threaten to act as a major brake on future long-term growth.”

Labour Market statistics for last three months released (16th October) by The Office for National Statistics (ONS):

The employment rate for those aged from 16 to 64 was 71.7%, up 0.3 percentage points from March to May 2013 and up 0.4 from a year earlier. There were 29.87 million people in employment aged 16 and over, up 155,000 from March to May 2013 and up 279,000 from a year earlier.

The unemployment rate was 7.7% of the economically active population, down 0.1 percentage points from March to May 2013 and down 0.2 percentage points from a year earlier. There were 2.49 million unemployed people aged 16 and over, down 18,000 from March to May 2013 and down 40,000 from a year earlier.

The inactivity rate for those aged from 16 to 64 was 22.2%, down 0.2 percentage points from March to May 2013 and down 0.3 percentage points from a year earlier. There were 8.95 million economically inactive people aged from 16 to 64, down 83,000 from March to May 2013 and down 88,000 from a year earlier.

Total pay rose by 0.7% compared with June to August 2012. Regular pay rose by 0.8% over the same period.

Average weekly earnings excluding bonus payments rose by 0.8% comparing June to August 2013 with the same period a year earlier. In cash terms, average weekly earnings excluding bonus payments were £447 in August 2013, before taxes and other deductions from gross pay; this is up from £444 a year earlier.

The average weekly wage, including bonus payments, rose by 0.7% comparing June to August 2013 with the same period a year earlier. At £474 in August 2013, average weekly wages including bonus payments were slightly higher when compared with August 2012.

Private sector earnings up 1.1% on the year but public sector earnings down 0.5%

Average weekly earnings including bonus payments rose by 0.7% comparing June to August 2013 with the same period a year earlier. Average weekly earnings for the private sector increased by 1.1% but average weekly earnings for the public sector fell by 0.5%, the first time a negative growth rate has been recorded since comparable records began in 2001. Lower growth rates were recorded across a wide range of public sector employers.

In August 2013 average weekly pay including bonus payments in the private sector was £473, lower than the public sector figure of £484. However, excluding publicly owned financial corporations, average weekly pay in the public sector was £473, the same as for the private sector.

Comparing June-August 2013 with the previous three months, there was a rise in the number of employed people, and falls in the number of people who were unemployed and the number of people not in the labour force.

Comparing June-August 2013 with a year earlier, there were 279,000 more people in employment, 40,000 fewer unemployed people and 88,000 fewer people not in the labour force (economically inactive).

Employment up 155,000 on the quarter, mainly due to more people working full-time

Comparing June to August 2013 with the previous three months, the number of people in employment increased by 155,000 (to reach 29.87 million), the number of unemployed people fell by 18,000 (to reach 2.49 million) and the number of people not in the labour force aged from 16 to 64 fell by 83,000 (to reach 8.95 million).

Looking in more detail at the quarterly increase in the number of people in employment, the number of men in full-time employment increased by 69,000 (to reach 13.86 million) and the number of women in full-time employment increased by 79,000 (to reach 7.96 million). The number of men in part-time employment increased by 21,000 (to reach 2.12 million) but the number of women in part-time employment fell by 13,000 (to reach 5.93 million).

Although the number of people in work has increased, the employment rate is lower than before the 2008-09 economic downturn

The percentage of people aged from 16 to 64 who were in work for June to August 2013 (the employment rate) was 71.7%, which is lower than before the 2008-09 downturn. In March to May 2008 the employment rate peaked at 73.0%. It then fell, as the economic downturn impacted on the labour market, and it reached a trough of 70.2% for July to September 2011 before recovering to reach 71.7% for June to August 2013.

A further fall in the number of Jobseeker’s Allowance claimants

Comparing September 2013 with a month earlier the number of people claiming Jobseeker’s Allowance (JSA) fell by 41,700 to reach 1.35 million and, over the year, was down 214,500. The number of JSA claimants is the lowest since January 2009. For September 2013 there were 879,000 men and 472,100 women claiming JSA.

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