April 17, 2014
Unemployment dropped below 7 per cent for the first time since the recession, according to figures published yesterday by the Office for National Statistics (ONS). Jobless figures fell by 77,000 to 2.24 million in the three months to February 2014, taking the unemployment rate to 6.9 per cent for the first time since 2009. The figures also show a small growth in regular weekly pay, which, excluding bonuses was up by 1.4 per cent on the year. However, the recovery appears to remain regionally unbalanced, with London and the Greater South East powering ahead of the rest of the country. Said Ian Brinkley, chief economist at The Work Foundation: “Employment levels in the North East are lower today than they were at the end of the recession, measured by the workforce jobs indicator. Gaps in regional employment performance are also widening rather than narrowing.”
Mark Beatson, CIPD Chief Economist, pointed out that although the single month annual growth rate for average earnings was higher than headline inflation: “We need to remember that this closing of the gap is more due to inflation falling faster than expected as it is to higher earnings growth.”
Beatson also remarked that the increase in earnings growth has not been across the board.
“Higher bonuses have been a factor and the growth rate of regular pay, at 1.4 per cent, is still below all measures of inflation. Earnings growth has also been concentrated of late in wholesale and retail, hotels and restaurants, manufacturing and construction and may in part be due to more hours being worked rather than an increase in hourly pay. Pay awards in general are not showing signs of significant acceleration and if headline inflation remains below 2 per cent this year that might take the edge off any build up in pressure on employers.
“Until we see clear evidence that business and consumer confidence are delivering investment and improved productivity, we are unlikely to see significant increases in real hourly pay.”
Neil Carberry, CBI Director for Employment and Skills, argued that the fall in unemployment was aided by the UK’s flexible jobs market.
“This is a positive set of figures which shows again that our flexible jobs market works. Firms are hiring at a faster pace, the number of people out of work is at a five-year low and the majority of new jobs are full-time.
“We’ve always said that as growth picks up more people will feel the benefits. Businesses are creating jobs across all sectors and real wages in the private sector are rising.”