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Jobs growth is a sign of strength, but wages continue to disappoint

14 Aug 2018

Responding to latest official labour market statistics, showing employment rose by 313,000 compared with a year earlier, Tej Parikh, Senior Economist at the Institute of Directors, said:

“The latest data shows that the UK labour market remains in rude health, but despite the increasingly heated competition to fill vacancies, wage growth continues to be a challenge.

“The enduring desire for businesses to hire and create new positions is without doubt a sign of strength in the face of unprecedented economic uncertainty. Yet with the pool of available workers shrinking at a rapid speed, particularly given flagging immigration numbers, firms are finding it harder to recruit the staff they need.

“Under any normal circumstances this would mean pay packets should rise markedly as corporates compete for workers, but we shouldn’t hold our breath. Many businesses are still struggling to find the margins to notably boost salaries given sky-high business rates, the rise in national living wage, and subdued productivity growth.

“The employment figures must not be taken for granted. It’s paramount the Government provides clarity on its proposed post-Brexit immigration system to help business leaders engage in meaningful workforce planning. Meanwhile, the Chancellor must include provisions in the forthcoming Autumn Budget to help businesses manage costs and invest in their organisations if we’re to see a sustained pick-up in wages.”

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