In response to labour market figures released today, which show unemployment fell by 39,000 to 1.63 million between May and July, James Sproule, Chief Economist at the Institute of Directors, said:
“Despite initial concern after the referendum, it’s good news employers haven’t panicked and there’s been no immediate spike in unemployment. The rise in real wages is indicative of the tightness of the labour market, and combined with the living wage, pensions auto enrolment, and the apprenticeship levy, all will be adding to firms’ fixed costs. Although employment rose in the professional services and construction sectors, vacancies have decreased by ten percent and 25 percent, respectively, compared to same time last year, pointing to a peak having been reached.
“Jobs figures are a lagging indicator, and the hiring decisions of firms over the next few months will be heavily influenced by how confident they feel about the future. We have to accept that uncertainty over Brexit negotiations will be there for the next two years at least, but the Government can put domestic policy on the best footing possible. They must use the Autumn Statement to boost investment by raising the annual investment allowance, and get on with smaller, shovel-ready infrastructure projects. Pausing the implementation of the poorly-designed apprenticeship levy would also show the Government is focussed on business policy that really works. In the medium-term, drastically simplifying the tax system for small and medium sized firms will make it much easier for them to grow and create jobs”.