More full-time permanent jobs signal pick-up in demand for staff despite rise in unemployment

Labour market figures for the period April-June, published today by the Office for National Statistics (ONS), show that UK unemployment continues to mount. But the figures overall point to a recovering jobs market with more people in full-time jobs on permanent contracts, says CIPDís Chief Economist Dr John Philpott.

Dr Philpott continues:

Demand for labour picking-up
ìThe demand for labour is starting to pick-up after the hiatus at the end of last year. According to todayís ONS figures not only are there more people in employment but, in a break with the recent trend, all the new jobs are going to full-time employees. And the number of temporary employees and self-employed has fallen suggesting that employers are becoming confident enough to recruit permanent staff rather than rely on contract workers. The rise in full-time work has benefited men in particular, the number of women in work remaining broadly stable. The ONS figures showing rising job vacancies and fewer redundancies are consistent with the latest CIPD/KMPG Labour Market Outlook survey findings, also published today. However, as the CIPD/KPMG survey shows the improvement in demand for labour is confined to the private sector and stronger in the south rather than the north of the UK.

Private sector pay on the rise
ìWith demand for labour improving, the continuing rise in unemployment is now clearly driven by strong growth in labour supply as more immigrants enter the jobs market and the government gets better at getting the economically inactive jobless to look for work. This is helping to keep the lid on pay rises overall, with pay pressure dropping markedly in the public sector. Both the latest ONS figures and the CIPD/KPMG survey figures suggest that while private sector pay pressure is rising, pay increases still look sustainable. But with private sector employers now competing more vigorously for staff and the cost of living growing, forthcoming private sector pay settlements may hold the key to whether interest rates rise further in the coming months.î