Businesses welcome employment figures but lament poor wages

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Employment experts have reacted positively to lower youth unemployment, but concerns remain over low pay in response to the latest ONS employment figures.

The UK Labour Market August 2014 report revealed that unemployment has fallen by 0.1 percentage points in the past quarter to 6.4% – the lowest figure since 2008. This means 2.08 million jobseekers are unemployed, 450,000 lower than the previous quarter.

But the figures also revealed a contraction in average salaries (including bonuses), which have fallen by 0.2% in the past year. This is the first contraction in seven years.

The number of young people (16- to 24-years-old) who are not in work or full-time education also fell by 102,000 from the previous quarter and now stands at 767,000.

The UK Commission for Employment and Skills chief executive Michael Davis highlighted the need to continue to focus on youth unemployment, citing the value of experience as a key part of the message.

“The importance of giving young people opportunities to gain experience cannot be overstated," he said.

“For all young people, experience is invaluable because it is what employers value the most. For businesses engaging with local schools, colleges and universities, this is the best way for them to ensure they end up with an inspired and well prepared young workforce.”

CIPD chief economist Mark Beatson warned that the high number of unemployed people moving to self-employment may lead to a variance in hours and decreased stability. But he predicted that the fall in average wages could be a "one-off".

"This might be one of the ripples from changes to the top rate of income tax," he said. "But if we look at the data excluding bonuses, average weekly earnings in June were the same as in December last year and up by only 0.8% on June last year."

Lancaster University's Work Foundation chief economist Ian Brinkley called the wage figures "dismal".

"Growth in regular pay – excluding bonuses – measured by weekly average earnings is weakening across all sectors," he said. "It is hard to see where the pay revival is going to come from, and until real wages start to grow again, it will not feel like much of a recovery to most people in work.”

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