In the second quarter of 2010, retail full-time equivalent (FTE) employment was up by 3.6% compared with the same quarter a year earlier. This is equivalent to a net increase of 22,055 retail jobs. The increase in employment was driven by a 3.0% net annual increase in the number of stores in the second quarter – 486 additional retail outlets.
The latest data confirm the retail sector continued to create employment in June, the number of FTE employees up 3.0% year-on-year, while there was a net increase of 3.1% in store numbers.
The first quarterly BRC-Bond Pearce Retail Employment Monitor (REM) shows 58% of retailers intend to maintain staffing levels in the coming three months, while one in three intends to increase employment. Only 8% of the sample intend to cut staffing levels in the next three months.
Compared with intentions this time last year, the Monitor suggests retailers feel slightly more confident about maintaining and increasing levels of employment.
Stephen Robertson, British Retail Consortium director general, said: "This is the first time retail employment data this up-to-date has been available and it shows retailers driving the recovery.
"It's a remarkable achievement that, in the face of economic uncertainty, retailers in our Monitor have created 22,000 jobs and added nearly 500 stores since this time last year. Economic conditions and consumer confidence have certainly improved in the last 12 months but from a weak starting point.
"Consumer spending has been surprisingly resilient over the year and generally retail sales have remained robust. With unemployment at 2.5 million and with significant public sector cuts to come, it’s encouraging retail is actively creating jobs.
"The sector currently employs 2.9 million people. In this difficult environment, politicians must think very carefully before introducing burdens on retailers that risk undermining their vital role in generating jobs."
Christina Tolvas-Vincent, head of retail employment at business law firm Bond Pearce, added: "With retailers representing 8% of GDP and 11% of the total UK workforce, these are encouraging results for the overall economy. During the worst recession for two generations retailers have kept their eye on the long game, as demonstrated by their continued investment in staff and stores.
"The retail sector is often seen as a barometer for business confidence at large and such solid growth, in extremely difficult conditions, is a positive indicator that we are moving in the right direction. However, we are not out of the woods yet; with the effect of public sector cuts and the increase in VAT still to come, there are challenges ahead and the next six months will be critical for the sector."
The latest official Government statistics showed a slight improvement in the labour market overall. The unemployment rate for the three months to May was 7.8%, down 0.1 percentage points on the quarter. The number of unemployed people fell by 34,000 over the quarter to reach 2.47 million. The claimant count fell in June by 20,800 to reach 1.46 million.
Considering the depth of the recession, the labour market has been surprisingly resilient compared with previous recessions. The number of claimants continued to rise for fifteen months following the end of the recession of the early 1990s and for 28 months following the recession of the early 1980s. In 2009, the claimant count began to reverse just after the end of the recession, now having fallen for five consecutive months.
According to the BRC-Bond Pearce REM, the retail labour market outperformed all other sectors of the economy throughout the recession and continues to do so in the recovery (Chart 1).
During the last 12 months the economic environment has recovered considerably. Improvements in consumer confidence, easing credit markets, a revival in the housing market and crucially, action taken by the Bank of England, have all supported growth. As a result, consumer spending has been surprisingly resilient given the size of the downturn and retail sales have remained robust. These factors have given many retailers the impetus to continue to invest and pursue growth strategies, thereby creating new stores and job opportunities.
In the three months to June, FTE retail employment was up by 3.6% compared with the same period last year – the equivalent to a net increase of 22,055 retail jobs in our sample. This was up on the first quarter in 2010, when FTE employment grew by 1.8% (chart 2) compared with the previous year.
Although the Monitor is still in its infancy, the series only stretching back to October 2008, annual comparisons revealed strong retail job creation for nine consecutive months, shown in chart 3. The overall trend reveals that the rate of growth has generally increased during the last nine months.
The increase in the level of employment was driven by an expansion in store numbers which rose by 3.0% in the second quarter, year-on-year. This was equivalent to an additional 486 retail outlets in our sample. Chart 4 demonstrates the growth in retail outlets since October 2008, compared with the average number of FTE employees per store.
Throughout the year, average FTE employment is fairly volatile and responsive to seasonal demands. The spikes can be attributed to the demands of Christmas, but accounting for fixed effects, this measure remained fairly stable throughout the quarter. One-off factors, such as the World Cup, acted as a mild boost to annual employment levels. Some of the increase in staffing levels can be attributed to stores changing stock lines and altering display units in the run-up to the World Cup – although the overall impact was likely to be slight.
The creation of new outlets and jobs was heavily weighted towards the grocery sector which continued to open new stores throughout the quarter.
The number of redundancies as a proportion of the overall retail workforce is extremely low. On average fewer than one in 1,500 employees was made redundant each month in the last year. Recently, the measure has been more volatile, which is likely to be due to seasonal factors such as the timing of Easter sales falling in April last year, but March and April this year.
Comparatively, the redundancy rate in the overall economy remained higher than the retail sector, according to our sample. However, the redundancy rate in the overall economy has steadily declined over the last 12 months. It is likely that the rate will rise in the medium term to reflect sharp spending cuts in the public sector.