Latest Labour Market Statistics: Self-employed dominate employment growth while pay rises continue to lag behind inflation


Commenting on the Labour Market Statistics released by the Office for National Statistics (ONS), Gerwyn Davies, the 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.”

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