Employment could grow by a further half a million over the next twelve months exceeding predicted expectations.
The annual labour market analysis report, issued by Chartered Institute of Personnel and Development (CIPD), highlights that ‘the unprecedented milestone of 30 million people employed in the UK’ had already been reached, even though only a year ago the Office for Budget Responsibility (OBR) was predicting this would not happen until autumn 2015.
Chief economist at CIPD, Mark Beatson, believes there is a “high likelihood” that employment will rise by more than 300,000 during 2014, and even by as much as 500,000.
However, there is a danger that improving jobs market could push unemployment below 7%, the rate at which the Bank could rethink interest rates, which could lead to a review of current monetary policy earlier than expected.
The report states that 2013 was the fifth calendar year in a row when average earnings fell in real terms, a situation unprecedented in at least the last 70 years. With employment having exceeded expectations for two consecutive years, Mark Beatson warns that if wages were to rise faster than prices on a sustainable basis, employers and policy makers would need to tackle the causes of the UK’s poor productivity performance.
Mark Beatson, CIPD Chief Economist
“This time last year we were talking about the UK’s ‘jobs enigma’. Since then, labour market performance has continued to exceed expectations, turning the UK labour market into a ‘jobs machine’.”
“Employment growth looks set to continue at an impressive rate over the year to come. However, the downside is that UK productivity has yet to improve and remains below its pre-recession level.”
“A lot of attention is being given to falling real wages and the UK’s ‘cost of living crisis’, for understandable reasons. But not enough attention is given to the main reason why this has happened – that productivity has fallen since 2008. Skills shortages in certain sectors may inflate wages for some, but if we are to create any realistic prospect of wages rising in real terms across the board, we need to improve productivity.”
“Central to this is business and government acting together to improve the way people are managed, with more emphasis on working smarter and creating value. This involves tackling the crisis of trust in many organisations, as well as developing better ways of valuing and making active use of the skills and talents of our workforce.”