Employment is on the rise again, but young people continue to miss out, despite trends for past two years that have flown in the face of the struggling economy.
Commenting on the latest ONS Labour Market statistics, released today, Mark Beatson, Chief Economist at the Chartered Institute of Personnel and Development (CIPD), said: “This month’s figures continue the trend that we have seen for the last year or so. The number of people employed has increased again to record levels – although the employment rate still remains below its pre-recession peak – and this has happened during a period when we have seen little evidence of economic growth. The number of unemployed people has increased slightly but this could be the result of welfare to work changes intensifying job search activity among those out of work and claiming benefits, and in the long term this should be beneficial to the economy by boosting labour supply. “One of the explanations as to why employment has continued to grow is the declining real value of earnings. The annual rate of growth of average earnings was 1.2 percent in January, which was 1.5 percentage points below the rate of inflation. As a result, those in work continue to see their living standards squeezed.
“It will be interesting to see whether the forecast accompanying today’s Budget from the independent Office for Budget Responsibility anticipates employment growth on this scale to continue when economic growth resumes, or whether they expect productivity to increase and more moderate rates of employment growth. “The employment figures for 16-24 year olds remain a matter for concern. The total number of unemployed 16-24 year olds has increased since last month’s figures. Young people appear to be missing out on the jobs growth we have seen, risking the future supply of talent and potentially leaving a permanent scar on the UK labour market. The mismatch between young people’s behaviour and employer expectations at the recruitment stage is part of the problem and via our Learning to Work programme we are seeking to address this disconnect.”