There was some really interesting data produced earlier this month relating to the state of the UK employment market. Over the previous couple of months the data produced by the Office for National Statistics (ONS), which showed an increase in the number of unemployed, and the data produced by the Recruitment and Employment Confederations (REC), which showed that although the pace of vacancies had slowed there was still an increase and the availability of candidates was becoming ever scarcer, appeared at odds.
This month they appeared to correlate much better. The REC report for September showed that although permanent placements continued to rise in September, the rate of expansion eased to a two-and-a-half year low.
Similarly, temporary/contract staff billings increased at the weakest pace in the current 29-month period of growth. Demand for staff continued to grow in September although slower rates of expansion were signalled for both permanent and temporary vacancies. This was mirrored in the rate of decline for available staff which deteriorated but at a slightly slower pace.
The ONS reported that the UK unemployment rate fell to a seven-year low of 5.4% in the three months to August. The number of people out of work was 1.77 million between June and August, down 79,000 from the previous quarter. The number in work rose by 140,000, bringing the employment rate to 73.6% - the highest rate since records began in 1971. Some 22.77 million people were in full-time employment, up 291,000 compared with the same period last year. The number working part-time rose by 68,000 to 8.35 million. Growth in average pay, including bonuses increased by 3% from the previous year and is growing at a faster pace than predicted.
This all sounds like great news; however the REC also produced a white paper which stated that the UK has the largest proportion of low-skilled, low-paid jobs than virtually any other Northern and Western European country.
Approximately 6m employees are paid less than the living wage of £7.85 p/h nationally or £9.15 p/h in London. This equates to nearly 20% of the working population or 1 in 5 people. The increase in the minimum wage to a living wage will help to redress this and bring us into line with our neighbours in Northern and Western Europe.
The question remains how will this affect the overall economy and jobs market? Many commentators predicted that the previous statistics produced by the ONS where unemployment had increased two months running was proof that announcement of a national living wage was putting employers off recruiting. That fact that employment was up by 291,000 over the past year tends to show this theory was off track.
As I said in a previous article wages have not kept pace with inflation since the recession and there is therefore scope to increase them. My sense is that if our European neighbours can afford higher wages for their lower paid then there is scope for us to do so as well.
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