Employment and pay continue to operate at two different speeds

  15th November 2013      
 Company News

Continued encouraging falls in overall and youth unemployment, but medium term outlook less certain as employers search for productivity boost

The latest quarterly labour market statistics, published earlier today by the Office for National Statistics (ONS), indicate that the current high levels of demand for jobs is not feeding through to pay.  And, as the CIPD/SuccessFactors Labour Market Outlook report published earlier this week showed, there is no sign of this situation changing in the short-term.  The same report also showed that most employers do not expect to see current increases in employment to feed through into substantial growth in employment over the medium term.

Gerwyn Davies commented on the latest ONS figures as follows:
“The jobs market continues to shine as we approach the New Year.  Increased vacancies, fewer redundancies, and a modest reduction in the unemployment rate offer further signs that the labour market is heading in the right direction

“However, how long this good news will continue remains uncertain. The CIPD’s own surveys indicate that demand for labour may soften in the medium-term, with fewer than one in five employers expecting to increase their head count by more than two per cent, even if they see stable economic growth of two per cent or more.  Once the current rises in employment have bedded down, we think employers are anticipating a greater focus on reversing the falls in productivity that resulted from lower than expected reductions in employment through the recession.  This will place an even greater onus on managers to maintain employee engagement and trust, which is essential if organisations are to get the best from their people.

“It is particularly encouraging to see a big reduction in unemployment amongst 16-24 year olds not in full-time education. However, with nearly one in five in this category still unemployed, government and employers need to maintain efforts to help young people find employment before they and the labour market as a whole are permanently scarred by this waste of talent and opportunity.

“Pay pressures meanwhile remained very subdued and remain almost as weak as at any point since the recession.  Public sector employees may be feeling that they are getting a double squeeze on living standards, with basic and total pay falling even before you exclude the inflation effect.  Looking ahead, CIPD surveys also suggest that pay will not increase for most workers until the second half of next year at the very least.”

Other key findings:

  • The unemployment rate for 16 to 24 year olds not in full-time education is 19.0%, down 0.7 percentage points from April to June 2013.
  • For the private sector, total and regular pay rose by 1.1%.
  • For the public sector, total pay fell by 0.4%, while regular pay fell by 0.1%.
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