Responding to employment figures released this morning which showed the unemployment rate falling to 5.7%, and average wage growth (including bonuses) running at 2.1% for the period October – December 2014, James Sproule, Chief Economist at the Institute of Directors said:
“Today’s strong employment figures and continuing signs of real wage growth will be welcome news to thousands of businesses and millions of employees. The growth in jobs over the last few years has been particularly impressive, and, as competition for talent heats up, wages will continue to rise, with two-thirds of IoD members planning pay rises at least in line with inflation over the coming months.
“Throughout the recession, employers and employees co-operated to save jobs, by forsaking pay rises and cutting back hours. We are now seeing the benefits of this mature and responsible approach. Businesses are recovering strongly, as they benefit from having maintained an experienced and skilled workforce, and staff are being rewarded with modest and sustainable pay rises and bonuses.
“Average earnings in this period were boosted by strong year-end bonuses across a broad range of sectors from construction and manufacturing to finance and business services, suggesting good performance across the economy. However, raising bonuses and not salaries implies some companies are still cautious about increasing their fixed costs.”