Responding to official labour market statistics, showing that the unemployment rate remained at its record low of 4.3%, and annual wage growth was 2.1%, Seamus Nevin, Head of Policy Research at the Institute of Directors, said:
“On the one hand record numbers of people are in work, but on the other, their wages are still being squeezed. The employment rate is up and the unemployment rate is down – to its joint lowest level in 40 years. Today there are now 32.10 million people with a job, 317,000 more than last year. On the surface these are great numbers but the question is increasingly becoming one about the quality rather than the quantity of jobs.
“Price rises are continuing to outstrip people’s pay in real terms because inflation is nudging up the cost of food and other household goods. Although inflation, currently at 3.0%, is expected to peak soon, it is clear that purses are being stretched further and further. Unfortunately, businesses too are facing higher costs and uncertainty about future revenues. This is leaving employers little wiggle room to offer inflation-busting pay increases.
“As the labour market tightens due to the shrinking pool of available workers, firms need to invest more in their organisations to boost productivity. But the cost of doing business is at its highest for some time. So, the Government must use its forthcoming budget to encourage and enable businesses to spend more, using cost reliefs and other investment supports to help boost productivity and therefore pay.”