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Experts urge caution over unemployment figures

Leading employment and business groups have reacted positively to the latest unemployment figures, but warn that there is "work to be done" around permanent employment and salaries.

The figures released by the Office for National Statistics (ONS) revealed that unemployment stands at 6.8% (2.2 million people), the lowest in five years.

Gerwyn Davies, CIPD's labour market adviser, said that despite the job market going "from strength to strength", wages are a concern. 

"Consistent with CIPD predictions, the average basic pay increase has fallen slightly to 1.3%, which remains well below the pre-recession average of 2.5%," he said. 

He added that the skills shortage, currently restricted to specialist sectors such as engineering, could spread to the wider labour market. 

"Employers need to be developing existing workers, as well as hiring new ones, if they're to mitigate this risk and ensure they have the skills to grow," he said. 

The Work Foundation's chief economist Ian Brinkley warned the large increase in temporary workers, which accounts for one-third of new jobs, means employment is not always secure. He added that even this figure doesn't always take into account zero-hours workers. 

"Zero-hours contracts are more likely to be for permanent than temporary posts," he said. "We have no reliable way of knowing what their contribution to overall employment growth has been in the last quarter. The good news may not therefore have much impact on perceptions of job insecurity.”

Bernard Brown, partner and head of business services in KPMG’s management consulting practice, welcomed the return to a "buoyant labour market". He suggested that the young will feel the benefits.

"Employers will ignore their hunger for work at their own risk," he said. "While it is important to have people in place with the right level of experience for today’s needs, they also have to plan for tomorrow."