Labour demand growing, but many employers prefer to increase hours not people

There was a fall in unemployment of 18,000 to 2.49 million from March to May of this year according to the latest figures published today by the Office for National Statistics (ONS). Between June and August 2013 the unemployment rate dropped from 7.8 per cent to 7.7 per cent, with a slight rise in total pay of 0.7 per cent. Although the news was welcomed by employment experts, Nigel Meager, Director of the Institute for Employment Studies pointed out that while employment increased by 0.9 per cent in the last year, the number of hours worked in the economy grew faster; and CIPD Chief Economist Mark Beatson commented that there is no sign yet that increased demand for staff were leading to higher wages.

“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,” said Nigel Meager, Director of the Institute for Employment Studies.

He added: “‘It is interesting to note that while employment increased by 0.9 per cent 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.”

Mark Beatson CIPD Chief Economist 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 per cent, two percentage points below the current rate of inflation.”