Commenting on today's labour market statistics, Geraint Johnes, director at Lancaster University’s Work Foundation, said:
“Ahead of today’s Budget Statement, the Chancellor can be encouraged by the latest release of labour market statistics. Unemployment continues to fall, and stands at 5.7% for the three months to January. Meanwhile the healthy growth in employment levels has continued. Over the most recent quarter, the number of full-time employees has increased by 139000, while the number of part-time employees has risen by 24000. There has been a decline of some 42000 in the number of self-employed workers, but an increase of 24000 in the self-employed working part-time.
“Last month, some concern was raised about the increase in unemployment of young workers (under the age of 25). While unemployment continues to rise for 16 and 17 year olds, the latest data show a renewed fall in unemployment for those aged under 24. Taken as a whole, these data suggest a labour market that, in aggregate, is continuing to recover well; equally encouragingly, they indicate that the market is, slowly but surely, regaining a degree of normality, with people continuing to move toward more secure employment.
"There have been big gains in employment over the quarter in several industries, notably construction (32000), real estate activities (34000), administrative and support services (41000), and accommodation and catering services (24000). Meanwhile employment has declined in the health sector, and in arts, entertainment and recreation services. Vacancies continue to rise, providing a further sign of a healthy recovery.
“Pay has been an issue of considerable interest in recent months, with the apparent restoration of growth. While the latest figures continue to show rising pay in real terms – following a very prolonged and severe decline - the rate of increase has, in the most recent data, appeared to slow somewhat. The year on year change in total pay in January was just 1.1% (down from 2.4% the previous month). This sharp fall is largely accounted for by the distorting effect of end-of-year bonuses in the financial sector. Excluding the effect of bonuses, the annual rate of pay growth is steady at 1.6%.
“While we might expect to see a continued recovery in pay over the course of the next year, sustaining such an increase will need the long awaited turnaround in productivity to be realised. Productivity – what businesses can do and what the government can do to restore it – really poses the biggest question that the Chancellor needs to address in his Budget this afternoon. If productivity can rise at a steady state once more, the budgetary plans of all parties start to look as though they can be achieved. But if it cannot, meeting deficit targets will be an impossibility.”