ONS Stats: Record low for unemployment, but productivity gap increasing and real wages falling

The latest figures from the Office of National Statistics, released today, reveal that between January to March 2017 and April to June 2017, the number of people in work increased, the number of unemployed people fell, and the number of people aged from 16 to 64 not working and not seeking or available to work (economically inactive) also fell.

The UK unemployment rate fell to 4.4% in the 3 months to June 2017 – the lowest it has been since 1975.

However, despite the good news on employment, productivity saw further falls, by 0.5% from January to March and by a further 0.1 from April to June.

In further bad news for hard-working Brits, when adjusted to reflect inflation, real average weekly earnings fell by 0.5% in the 3 months to June 2017, both excluding and including bonuses as consumer price inflation continues to outpace growth in wages.

The ONS also released statistics that say 883,000 people are on zero hours contracts for Apr-Jun 2017, 20,000 lower than for a year earlier.

Reacting to the figures, senior HR figures commented:


Gerwyn Davies, Senior Labour Market Analyst at the CIPD, the professional body for HR and people development said:

“Predictions that wage growth would accelerate due to rising inflation and a low unemployment rate have still yet to bear fruit. This is no surprise given today’s poor productivity figures, which continue to weigh on the pay prospects of UK workers. However, it also seems that employers are turning to under-utilised groups of the labour market, such as ex-welfare claimants and older workers, to help offset the relatively tight labour market conditions.

“Our Labour Market Outlook survey, published on Monday, showed that many employers are still receiving a relatively high number of suitable applicants for roles, especially for low-skilled vacancies. However, we should not overlook the fact that the UK economy is currently generating a significant number of high-skilled roles, which could lead to rising skills shortages unless employers raise their game through investment in capital and machinery, improving workforce skills and adopting smart working practices. This threat will increase if skilled workers from the EU14 and EU8 decide to leave the UK to look for work elsewhere.”


Lee Biggins, founder and managing director of CV-Library, said:

“It’s extremely positive to see that employment rates are continuing to rise, and this is reflected in our own job market data from the second quarter of 2017. Our data found that not only did jobs increase by 1.6% on Q1 2017 but they jumped by a staggering 14.9% when comparing data with the same period last year.


“Furthermore, we found that organisations in some of the UK’s key industries are remaining confident and continuing to invest in their workforce. Our data indicates that the manufacturing, charity, automotive and social care sectors all saw an impressive increase in job vacancies last quarter. This is particularly good given that some of these sectors were predicted to be hit hardest by Brexit.


“As well as this, our Q2 data remains in line with ONS figures, which revealed that weekly earnings have increased when compared to the same period in 2016. While real earnings may be declining, we found that advertised salaries increased by 1.9% when comparing year-on-year data, suggesting that organisations are willing to invest in potential new recruits.”

David Willett, Director at The Open University, said:
”The UK’s lagging productivity is a matter of national concern. Now faced with a growing skills gap, which may be exacerbated by Brexit, it is more important that employers focus on building skills that help them to increase productivity now and future-proof them against future economic, political and technological changes.
”Instead of buying in skills, employers should focus on boosting the skills of existing employees through effective use of the apprenticeship levy and additional workplace training. The Taylor Review highlighted the need for better access to lifelong learning and by embracing this organisations will not only increase diversity and social mobility, they will gain the vital skills required to lift productivity.” 
Adrian Lewis, Commercial Director, Activ Appraisals, said:
“It’s amazing that, as a nation, we are failing to address the productivity gap that consistently shows our country being outperformed by our EU neighbours.  Businesses need to urgently tackle productivity and performance issues by engaging their staff if the UK is to remain competitive post-Brexit.  In our opinion, a proper, robust system for two way feedback and consistent performance reviews is the most cost effective way to deliver this.”


TUC General Secretary Frances O’Grady said :

“Rising prices and stagnant pay are a toxic combination for working people. This is the fourth month in a row where wages have fallen behind the cost of living.


“Ministers are sitting on their hands as another living standards crisis unfolds. It’s time to boost wages by scrapping the pay restrictions in the public sector, investing in infrastructure, and increasing the minimum wage.”

Commenting on the number of workers on zero-hours contracts, which remain around 900,000, Frances added:

“Far too many people are still being treated like disposable labour, stuck on contracts with little security or certainty.  Today’s figures show that zero-hours contracts won’t disappear by themselves. It’s time for the government to crack down on dodgy employment deals and ban these type of contracts.”


Peninsula Employment Law Director Alan Price said:

“Zero hours contracts have received mass negative publicity regarding their use and the unfair treatment of staff working under these contracts. Large companies, such as McDonalds, have been seeking a move away from these contracts by giving staff the opportunity to request a contract with guaranteed hours, calculated as an average of the hours worked under their previous zero hours contracts. It is likely many other companies are recruiting on similar contracts containing a small number of guaranteed hours and then requesting staff to work extra hours as and when to meet business demands.


“Moving away from the name ‘zero hours contracts’ removes the negative connotations associated with these contracts and improves public perception of the company. It can also make recruitment easier by defining available positions as flexible and guaranteed hours, rather than zero hours.


“The passing of a number of years since the initial increase in use of these contracts may have led to businesses realising that they don’t need the extent of flexibility allowed under these contracts, or that they can structure ‘normal’ contracts to meet the needs of the business effectively. Zero hours contracts are effective when used in a new business or one where there isn’t a consistent customer demand so, a number of years down the line, the business need for these contracts may have diminished.”


Doug Munro, co-founder of Adzuna, says:

“Brexit uncertainty is impacting wage negotiations – affecting both advertised salaries and what existing employees are likely to take home in their pay packets – as the Bank of England has voted to hold rates and cut growth forecasts. Despite seeing some momentum building in certain regions according to Adzuna’s data, wage growth is likely to be stunted further than previously anticipated. Adding insult to injury, rail fares are set to rise by up to 3.6% for commuters, which will most likely hit workers in the capital hardest.


“However, the employment rate remains strong according to ONS figures and this is supported by Adzuna data which shows UK vacancies are at a 19-month high. Encouraging as this is, the quality of new roles is as important as the quantity. Mark Carney, governor of the Bank of England, has mentioned a small number of firms are less willing to give bigger pay rises given that the outcome of the market is not clear. For jobseekers and employees, this means remaining cautious of weak wage growth combined with rising inflation, which will have a hold on their spending power.”




Author: Editorial Team

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