Better news on job creation marred by further rise in numbers of inactive jobless people

Today’s official monthly job statistics show there has been a healthy rebound in job creation, with employers adopting innovative approaches to filling vacancies and avoiding the need for inflationary pay increases, according to John Philpott, Chief Economist at the Chartered Institute of Personnel and Development.

However, record numbers of economically inactive people and continued rises in the levels of long-term sickness continue to pose cause for concern.

Dr Philpott said:
The latest labour market statistics show that there was a healthy rebound in employment growth in the summer months following a period of relative stagnation earlier in the year. Net job creation was sufficient not only to help unemployment fall between July and September but also to raise the employment rate for the first time since last winter.

New approaches to filling vacancies
Against this background the fall in the stock of vacancies of almost 10,000 in the latest quarter is a sign that employers have been achieving progress in improving recruitment techniques to make better use of active jobseekers. This, along with increased hiring of migrant workers to fill vacancies, has also helped keep underlying wage growth (excluding bonuses) in check in both the private and public sectors.

No need for interest rate rise
Evidence that employers are meeting their demand for staff without having to raise pay rates indicates that labour market pressures do not at present justify any further rise in interest rates by the Bank of England.

Record levels of economic inactivity
However, despite the good news on jobs, the number of economically inactive people - those without jobs and not looking for work - continues to rise to ever higher record levels, reaching 7.9 million. The Government can take some comfort from a new seasonally adjusted data series - published today for the first time - which shows that the rise in the economically inactive population in recent years is being driven primarily by an increase in the number of students rather than people likely to be receiving welfare benefits.

Long term sick
But the number of people classified as long-term sick remains very high at over two million and has increased by 60,000 in the past year. The Chancellor must use next month’s pre-Budget statement to set out specific proposals for helping more the long-term sick people into work, including changes to the benefit system that encourage people on Incapacity Benefit to participate in the jobs market so that they become visible to prospective employers.