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UK Employment Levels are on the Rise

11 Jan 2017

27 October 2016
Jonathan Oxley, chairman, Institute of Directors in Yorkshire and the Humber

It is extraordinary that UK employment levels have been so resilient during such a turbulent period.

The latest UK labour market figures from the Office for National Statistics (for the periods March to May 2016 and June to August 2016) show that both the number of people in work and the number unemployed increased.

The balancing figure, those not seeking work or unable to work (the “economically inactive”), fell accordingly.

The highlight of these figures is that the employment rate, at 74.5 per cent, is the joint highest since records began in 1971.

Indeed in the immediate aftermath of the 2008 financial crisis almost everyone expected unemployment to rise rapidly as businesses cut costs. Instead a very interesting thing happened – businesses and their employees demonstrated that they actually hadn’t forgotten their history and, accordingly, were not doomed to repeat it.

Demonstrating an incredible maturity, employers and employees realised that they had a common problem of such enormity that they had to work together to solve it. 

Businesses knew that the cost of making staff redundant was too great, both financially and in respect of lost progress and opportunities, especially when you consider the cost of rehiring and retraining to catch up lost time.

Employees knew it was better to keep a job than lose one and be forced to search for employment in a difficult market.

The result was not just a truce but an active engagement, which led to solutions based on no or minimal wage increases and more flexible and part-time hours. It was not uncommon for staff to accept a variation to their contractual hours, shrinking their time to meet reduced demand and to reduce the cost of employing them in the short term.

These tactics proved remarkably successful and are part of the reason why the employment figures today are so high.

Other factors contributed to making such arrangements work, including low inflation and the relatively low number of business failures (given the scale of the crisis).

This was in sharp contrast to, for example, the recession at the end of the 1980s where so many businesses were put into receivership, which inevitably resulted in job losses.

What does this tell us about the future?

In the context of Brexit it must occur to some in Government that there is an opportunity to bring people together around the project of making the newly “independent” Britain great again.

The obvious challenge is that, for this to succeed, you need the enthusiasm of the 48 per cent who voted against Brexit (and those who didn’t care enough to vote).

When so many people and political parties are still arguing the toss on the vote, let alone its implementation, it is difficult to see such a strategy succeeding. 

However, if negotiations with the EU lead to a deal that most consider reasonable, it might unify the British view.

It is unfortunate that we have run into another potential crisis at just the point where businesses could and should be looking to further reward those who stuck the course and helped them through difficult times.

It’s not going to be easy to convince people to get the hair shirt back on in case Brexit turns out to be a bumpy ride. In reality it may not be Brexit, which IoD Chief Economist James Sproule told an audience in Leeds last week will be “just a slog”, but other issues such as unstable geo-politics and financial instability of some EU members that have more of a dramatic impact.

I hope that the maturity developed in labour relations is here to stay and that a process of active engagement in companies is underway so that all understand and are planning for the future - whatever it may hold.
We are in for a period of change and that requires all stakeholders to be informed, engaged and helping, not hindering.


Media enquiries

Cicada Communications on 01423 567 111 or email Richard or Clare 

Richard Abbott 

Clare Walker
Notes to editors

• The Institute of Directors (IoD) was founded in 1903 and obtained a Royal Charter in 1906. The IoD is a non-party political organisation with approximately 35,000 members in the United Kingdom and overseas. Membership includes directors from right across the business spectrum – from media to manufacturing, professional services to the public and voluntary sectors. Members include CEOs of large corporations as well as entrepreneurial directors of start-up companies. 
• The IoD provides an effective voice to represent the interests of its members to key opinion-formers at the highest levels. These include Government ministers and their shadows, parliamentary committee members, senior civil servants and think-tanks. IoD policies and views are actively promoted to the national, regional and trade media. Follow us on Twitter to get the IoD’s reaction on business and public policy issues. 
• The IoD offers a wide range of business services which include business centre facilities, with 15 UK centres (including three in London, Reading, Birmingham, Cardiff, Manchester, Nottingham, Norwich, Edinburgh, Glasgow and Belfast) and one in Paris, conferences, networking events, virtual offices, issues-led guides and literature, as well as free access to business information and advisory services. The IoD places great emphasis on director development and has established a certified qualification for directors – Chartered Director – as well as running specific board and director-level training and individual career mentoring programmes. 

Contact IoD Yorkshire

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IoD Yorkshire & North East
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