Latest Labour Market Statistics: very good news on jobs but productivity and pay growth look likely to remain subdued
Commenting on the Labour Market Statistics released today by the Office for National Statistics (ONS), Mark Beatson, Chief Economist at CIPD, said: “We have recently seen unemployment start to fall quickly and forecasts being revised downwards but, even so, today’s figures are a surprise with the headline unemployment rate falling from 7.4% to 7.1% in a single month. We should remember these figures are statistics with margins of error attached to them and this does not mean we should expect to see falls of this size every month. Nevertheless, today’s figures are consistent with the state of the labour market last autumn. Our own Labour Market Outlook and other labour market surveys have shown consistently increasing confidence and hiring intentions. In addition, the claimant count has been falling quickly ever since the summer and this might now also be feeding through into the headline measure.
“Looking beneath the headline figures, half of the last quarter’s employment growth was due to a sharp increase in self-employment. The number of people who were working part-time because they could not find a full-time job has now started to fall. And probably the best news of all is that we have seen noticeable falls in the number of young people unemployed and the number of people unemployed for over a year.
“Of course, employment growth of this scale suggests that we may find that the fourth quarter of 2013 saw little or no growth in labour productivity. The weakness of productivity growth and the healthy state of the labour market explain why earnings growth remains below 1%, and these figures give little indication there will be any substantial movement in wage growth in the short term. Tackling our long-standing productivity problem requires policy makers, employers and trade unions to engage more closely with each other to find ways of stimulating investment, addressing long-term skill needs and making better use of the skills and talent already available in the workforce.”