Booming jobs growth highlights growing employer optimism, but improved productivity performance still needed for pay growth
Commenting on the Labour Market Statistics for February to April 2014 released by the Office for National Statistics (ONS), Gerwyn Davies, the CIPD’s Labour Market Adviser, said: “A quarterly increase of almost 200,000 full-time jobs shows that employers are becoming more optimistic about the future. Young people seem to be the biggest beneficiaries of this increase, which may be fuelled in part by the growth in formal training schemes and the appetite shown by an increasing number of employers to invest in their future talent pipeline.
“Meanwhile, the latest statistics also show that the number of public sector jobs fell only very slightly by 11,000, which aligns with our survey of employers. We are now seeing the education and health sectors making some new hires and replacing leavers. But we should not assume this is the end of public sector job cuts. The medium term outlook for the public finances suggests further job losses are likely in the next few years.”
Davies continues: “However, despite this positive picture, recruitment difficulties are yet to feed through to employers, which may partly explain why the pay trajectory appears to be moving in the opposite direction. The government’s welfare reforms, the availability of EU migrants and the latent supply from the under-employed are just some of the reasons why employers are still yet to report difficulty filling vacancies. However, the CIPD is urging employers in all sectors to start planning ahead to mitigate the risk of more widespread difficulties in the longer term.
“The fall in the rate of earnings growth also reflects the unwinding of events a year ago when some employers delayed bonus payments and pay rises to take advantage of the reduction in the top tax rate. Businesses may be expecting to invest more but this has still to show up in higher productivity growth and, until this happens, there is little leeway for higher earnings growth.”
Full press release published on www.cipd.co.uk
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