The industry reacts to latest employment figures
Stephen Barter, a director in KPMG Management Consulting, says, “There’s certainly cause for optimism with the latest employment figures. In the past few days we’ve seen inflation drop to its lowest level for four years, car sales rising and an increase in the number of people booking holidays. It all combines to suggest employees might be becoming more comfortable about job security and the latest figures seem to give credence to peoples’ renewed sense of confidence. Britain’s construction sector is also recovering, buoyed in part by a rise in demand for houses. Add this to the increased demand for skilled IT workers and it’s easy to suggest that we will continue to see an upward curve in employment continuing for some time to come.
“The question remains, though, around whether employers are able to find staff with the skills to match demand. For some time there have been concerns that skills shortages could derail recovery. Current levels of momentum give hope that the recovery will build, yet there are paradoxes. It seems clear that cautious employers - and possibly employees - are preferring to take temporary roles ahead of going firm on permanent posts. Yet real wages are starting to creep up. As in the US, some workers are choosing to exit the jobs market altogether. Yet business investment is finally starting to tick upwards. Both business and consumer confidence has to be nurtured."
Andrew Hunter, co-founder of Adzuna, commented, “The labour market is truly alive and kicking again. Far more people are in work than a year ago and competition for jobs across the UK has fallen by a third. And our live job market data shows that new vacancies are beginning to multiply, surpassing recent records as we move into spring.
“Following the revision of forward guidance, the new buzz-word on the jobs market is & lsquo;wages’. Or to be specific, real wages. These have tracked well below inflation since the financial crisis, slowly eroding household finances and contributing to diminished consumer spending power. This has hit households hard over the course of last year, salaries fell £2,136 in real terms. Now that inflation has fallen below target for the first time since 2009, real wages finally have an opportunity to catch up.”
David Morel, managing director of London-based Tiger Recruitment, commented, "The unemployment rate may have risen slightly in the final quarter of last year but the jobs market has had a very strong start to 2014. Companies are more active, and more keen to expand, than they have been for many years. This is something that's happening across all sectors. There is real and growing demand for extra staff, both permanent and temporary. As these figures underline, average pay-packets are now very much on the up. There is a lot more competition in the market among employers and this is seeing salary offers rise. To an extent, pay-packets have to rise because applicants are now being far more assertive about what they want to earn. People sense that the ball is much more in their court.
"We expect average salaries to continue to increase during 2014 as a result of more assertive applicants and competition among employers. With inflation falling and pay-packets rising, finally we may start to see people have more spending power."
Nigel Meager, director of the Institute for Employment Studies, said, “Today’s statistics from ONS are again encouraging, and confirm that the economic recovery is leading to an upturn in the labour market. The statistics tell us that there are nearly 200,000 more people in employment over the quarter, and 125,000 fewer unemployed people. Youth unemployment is also now starting to drift down as well. Total hours worked in the economy are growing, and job vacancies are up, strongly indicating a surge in hiring activity among employers. It is interesting to note that the growth in employment is almost entirely due to full-time employment. Part-time work has started to shrink slightly, and that shrinkage is mainly among & lsquo;involuntary part-time’ workers, that is those who are working part-time because they could not find a full-time job, whose numbers grew so greatly in the recession to nearly 1.5 million. It is very early days, but there may be some early signs in these figures that the recovery is starting to make a dent on the previously growing levels of & lsquo;under-employment’.
"Another notable feature of the latest data is the continuing growth in self-employment up by another 172,000 in the quarter to a new record of nearly 4.4 million. 14.5 per cent of all people in work are now self-employed, and there remains a debate about how far this reflects a genuine surge in entrepreneurship in the workforce which will ultimately generate many more sustainable new small businesses, and how far it consists of a raft of freelancers and odd-jobbers, doing bits and pieces of contract work in order to keep a toehold in the labour market until they are able to return to regular employment. If it is mainly the latter, then we might expect this self-employment boom to tail off as the economic recovery takes hold, and it will be worth monitoring these data in the months ahead.”
Gerwyn Davies, CIPD’s Labour Market Adviser, said, “It is unsurprising that employment growth is now dipping following last month’s surprisingly strong numbers and the CIPD/ SuccessFactors Labour Market Outlook survey which suggests this may continue in the early months of 2014. The continuing gap between pay and CPI inflation also reiterates our findings that employees and employers do not expect the rate of pay rises to increase significantly in 2014.
“Worryingly, the latest quarterly figures show that output per hour fell by 0.3%.This reflects the fact that the UK economy continues to suffer from a productivity hangover that is still hampering businesses’ efforts to become more competitive.
“One of the cures to this stubborn condition lies in greater business investment especially in training spend which has fallen relatively sharply in recent years. In addition, managers must find more creative ways to continue motivating employees. Communication with staff about other elements of the benefits package, praise and financial education are just some of the many tools that managers can use to offset the risk of a demotivated and unproductive workforce.
“Overall, while the immediate jobs outlook remains relatively bright, it looks as though the vast majority of workers will at best experience a standstill in real earnings, with the greatest challenges being faced by the rapidly growing number of self-employed people. As various studies have shown, average earnings for the self-employed have suffered a substantial fall since the recession and a striking point about the latest figures is that roughly three-quarters of the quarterly increase in employment is made up of self-employed.”
“It’s worth noting, however, that these figures are estimated from sample surveys and are subject to margins of error. Last month’s figures were much better than anyone expected so we might just be seeing statistical variation here. The underlying trend in employment is still clearly upwards. However, with productivity still languishing, no-one should assume stronger signs of growth will translate into significant further job creation. Employment growth is usually a lagging indicator, but appears to have been more of a leading indicator in this recovery.”
Anna Leach, CBI, head of group economic analysis, said, “Although the pace of employment growth has slowed from last month’s record rates, the fact that 193,000 more people found jobs is good news. It’s particularly encouraging that more people are finding full-time work and that there are fewer people turning to part-time roles because they could not find full-time positions. We expected wages and productivity to recover and the data suggests this has started to happen, with particularly positive signs on private sector pay. But with the unemployment rate remaining high at 7.2%, there is still a long way to go.”
Nigel Heap, managing director of Hays, commented, “Falling unemployment and rising employment mirrors what we are seeing with more jobs registered every day we are busy recruiting for people to join Hays to meet the increase in demand. Whilst there may be some discrepancy over the headline figure, it seems that the overall trend is still positive and UK employment is moving in the right direction. Since the beginning of the year we’ve seen a definite increase in business and candidate confidence, which is fuelling activity and increasing opportunities for jobseekers.”