The Institute of Directors has welcomed employment figures which showed the UK labour market continuing to tighten as official statistics confirmed that the unemployment rate held steady at 5.1% and wage growth ticked up to 2.1% in the three months to January 2016.
Wage growth in the private sector measured 2.3%, with some sectors, such as construction, seeing wages grow by much as 7.2%. Across the board, the number of vacancies remained high, with hiring sprees in industries that take on large numbers of young workers, like retail, accommodation and food services, helping to push the youth employment rate to 62.6%, up from 58.6% two years ago.
The number of temporary workers that cannot find full-time work has decreased by one-fifth since its peak in 2012 to 33.7%. However, the number of vacancies at small firms (those with 1-9 employees), dropped by 4.5%.
Michael Martins, Economist at the Institute of Directors, said:
“It is encouraging to see the UK labour market continue to tighten despite the economic headwinds we are hearing so much about. The employment rate is still at a record-high, the number of vacancies across the economy is at a near-record high and the number of people who cannot find full-time work continues to dip. Wage growth, too, is comfortably outpacing inflation.
“Current stability, in terms of both pay and jobs, may seem underwhelming against the quite spectacular job creation we saw coming out of the recession, but should be welcomed.
“In many sectors of the private sector wages continue to grow at an exceptional pace. Construction workers, for instance, saw their pay grow by more than seven per cent over the past year. In wholesale and retail trade the number of vacancies is also high – an indicator of the broad-based skills shortage facing UK employers.
“Nevertheless, we must not be complacent. While the UK outperforms its international competitors there are still significant hurdles on the horizon. The ‘national living wage’ is set to cost businesses nearly £1 billion and could be a drag on employment. There are also tentative signs that the very smallest firms are taking on fewer staff, as they pause to take stock of what the next few months, not least the EU referendum, could mean for their business."