“This data confirms what business surveys were telling us during the winter – after a long period in the doldrums, the labour market showed signs of life at the start of the year. A rise in employment and long-awaited progress on inactivity demonstrated real resilience in our labour market, and opportunities for workers.
“But let’s be clear, this performance felt like swimming upstream to employers. The rising cost of employment slowed the rate of recovery and it faces further pressure as the Gulf crisis increases uncertainty again. The picture for the rest of the year is now unclear. Unemployment is likely to rise further over time, and inflation rebound. With all of that in mind, the Government can no longer delay action that addresses the cost of employment crisis.
“Positive steps on reducing employment costs are needed to address the cost-of-living challenge. Firms can raise prices less and raise wages more where less of their margin is eaten by non-wage payroll costs and red tape. That means a much more practical approach to the role of government in the jobs market, and a focus on enabling businesses to do more. Government should start with a practical redesign of plans for rights to guaranteed hours for workers, which have departed so far from the original Low Pay Commission suggestion as to be unrecognisable. Without change, they promise to hole flexibility in our jobs market below the waterline, causing catastrophic damage to chances for young people in particular.”
