Monthly figures from the ONS show the labour market tightening. Average wages have also edged up 2.4% and with inflation at almost zero this represents a real increase in income, though many low paid workers continue to miss out on an annual pay rise. The total number in employment falling by 63 000 and the unemployment rate rising by 25 000 indicates that employers are reluctant to pay more for new staff, fearing this will eat into profits –some citing having to pay an increased future minimum wage as an additional problem.
A way out would be a serious increase in investment and in particular, more use of new technology with the aim of increasing both output, but also the current miserable level of productivity. It would also make it harder to justity wages being so low.
There’s little evidence of this happening (with investment expenditure at 15% of the GNP amongst the lowest internationally) and of any serious challenge to the current ‘growth’model, where output has been increased by adding to the size of the labour force and relying on a ‘reserve army of labour’ –zero hour, temporary contracts, part-time employees who can’t get a full time job. And of course, low-paid workers from overseas.
Although some analysts have welcomed the continued fall in youth employment as a sign that, because of increased difficulties with filling vacancies, employers have more incentive to recruit cheaper younger workers, this hardly bodes well for the future. Despite this increased optimism, youth unemployment stands at 16% – after full-time students looking for work are excluded it’s still 14%. Latest estimates for NEETS are due this week.
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