Youth joblessness falls but remains above pre-recession levels
Unemployment fell to its lowest rate, 6.4 per cent, for six years dropping by 132,000 to 2.08 million for the second quarter of 2014, official figures show.
Office for National Statistics data for April to June 2014 also revealed that joblessness was down 437,000 from the same period in 2013.
Figures show there were 30.6 million people in work, 167,000 more than for January to March 2014 and 820,000 more than a year earlier.
Wages (including bonuses) were slightly lower than a year earlier, down 0.2 per cent. “This was partly due to unusually high bonuses in April last year, although underlying pay growth excluding bonuses is also low," explained ONS chief economist Joe Grice.
Pay (excluding bonuses) was 0.6 per cent higher from the year before.
Commenting on the ONS figures, CIPD chief economist Mark Beatson said that the good news for jobseekers hasn’t translated into a rise in productivity, which explains why growth in pay has remained weak.
“At the beginning of this year CIPD said that 2014 needed to be a ‘year of productivity’ when organisations took advantage of better economic conditions to raise their game through investment in capital and machinery, improving workforce skills and adopting smart working practices. We warned that this would be the only way to sustain the recovery and create the headroom for higher real pay,” Beatson said.
John Cridland, CBI director-general, agreed: “While disappointing this month, we would expect wage growth to pick up over time, but this can only go hand-in-hand with improving productivity.”
Progress has been made in reducing youth unemployment as joblessness rates for 16 to 24 year olds fell to 16.9 per cent, down from 19 per cent for January to March 2014, and 21.4 per cent from a year earlier. Beatson said that the institute had seen improvements in youth unemployment through its own work with young people via its Learning to Work programme. However, the latest youth unemployment rate remains above the pre-downturn level of 13.8 per cent for December 2007 to February 2008.
Research published earlier this week by the CIPD in its Labour Market Outlook found that employers expect strong economic growth to be reflected in more hiring and weak wage growth. Beatson said that the pattern seen so far this year was likely to be repeated in the second half of the year.
“Although business investment is now picking up, this takes time to show up in higher productivity and needs a skilled workforce to make best use of it. Employers need to take advantage of the favourable market conditions to develop their workforce or else we face the prolonged prospect of a low pay, low productivity cycle.”