The ONS figures suggest that the labour market may be at least pausing for breath with a modest fall in the number of people in work following a sharp acceleration over the past year. By Gerwyn Davies, Labour Market Adviser at the CIPD.

“However, it’s interesting that the employment rate for young people continues to ride high compared with recent years.  This suggests that more employers are responding to a tight jobs market by turning to a wider pool of young people to offset the threat of future labour shortages and pay pressures. The other good news from the statistics is that productivity has finally returned to its pre-recession peak with increasing GDP output, combined with a slight fall in overall hours worked, suggesting employers are starting to make better use of their investment in people.

“As our Labour Market Outlook report showed earlier this week, the proportion of employers that plan to hire apprentices and school-leavers in response to recruitment difficulties has increased sharply over the past year or so. Students leaving university or school this summer, including those who may not have gained the grades they would have liked, can therefore feel relatively more positive about their prospects.” Davies continues: “The modest slowing in pay growth suggests that pay pressures are not growing as quickly as some commentators expect.  This is perhaps unsurprising given the increase in the number of young people and EU migrants in employment.  In addition, some of the increase in demand is being absorbed by part-time workers gaining more hours.  An encouraging aspect of today’s figures is that all of the employment growth over the past year has come from full-time employment, which correlates with a noticeable fall in involuntary part-time employment over the same period.”

According to the latest official statistics, pay for employees increased by 2.4 percent including bonuses and by 2.8 percent excluding bonuses comparing April to June 2015 with a year earlier. Looking ahead, we expect wages increases to remain moderate, as according to our Labour Market Outlook survey median basic pay award expectations among employers to June 2016 are 2 percent.