ONS Labour Market shows unemployment fall despite high youth unemployment

Aspire To Aspire

In the three months to December 2014, employment rose by 103,000 and unemployment fell by 97,000 compared with the previous quarter. The unemployment rate was 5.7%, compared with 6.0% in the previous three months. The youth unemployment rate was 16.2%, unchanged from the previous three months but lower than the 19.9% recorded a year earlier.
Following the release of this morning’s ONS figures, which found UK unemployment has continued to fall, Ian Burke, director of totaljobs.com, commented, “Today’s fall in unemployment comes as the major political parties turn their attention to employment in the run up to May’s general election.
“Labour has promised to offer apprenticeships to 80,000 school leavers while the Conservative Party has announced proposals for mandatory community work for 18-21 year olds.

“These announcements signal that ‘Generation Z’ is at the heart of the parties’ manifesto plans, which is welcome news as youth unemployment remains disproportionality high. Businesses can help by widening their recruitment net to ensure that the skills they require are clear and achievable for young jobseekers. Economic recovery alone will not solve youth unemployment.”

Michael Mercieca, CEO of Young Enterprise, said, “While overall unemployment is falling, this doesn’t tell the whole story. Youth unemployment is still triple the headline rate at 16.2 per cent. To avoid more young people falling into the highly damaging unemployment trap, immediate action is needed.

“We must equip our young people with skills such as communication, teamwork, creativity, problem-solving and resilience; readying them for the challenges, opportunities and responsibilities that they will encounter post education. We are blessed with some of the finest teachers in the world and an abundance of bright, youthful talent, but there still exists a huge disconnect between the education system output and the business world’s intake.

“The on-going 700,000 unfilled vacancies proves this. We have been leaving the youth behind for far too long, and we have the opportunity now to change this to create a society of opportunity for everyone.”

David Kern, chief economist at the British Chambers of Commerce, said, “The latest figures highlight the flexibility and resilience of the UK labour market. The growth in employment and fall in unemployment are stronger than a month ago and point to improved momentum in the economy after a weaker patch last year. It would not therefore be surprising if the ONS updates its preliminary 0.5% GDP figure for the fourth quarter of last year.

“One area of concern is that youth unemployment remains unchanged after a long period of steady declines. While youth unemployment remains much lower than a year ago, it is consistently higher than the adult employment rate, so we need to look at ways to bring this down further.

“It is positive that earnings are now increasing much faster than prices, however, it is important to remember that wage increases can only be sustainable if they are matched by increases in productivity. We must match the positive developments with the right policies, in order to support business confidence and help drive the economy forward.”

Gerwyn Davies, labour market adviser at the Chartered Institute of Personnel and Development (CIPD), the professional body for HR and people development, said, “Employers’ appetite for taking on workers shows no sign of abating.

“This is reflected by the record number of people aged 16-24 in work.  Apart from the modest increase in redundancies, all of the employment indicators are moving in the same positive direction. It’s good to see that more people are getting into work but the focus must now shift to what is happening to those people once they are in work. Skills shortages and utilisation is still a major problem in many businesses. If we are to improve overall UK productivity, we must lift up the bonnet on British businesses and take a look at what they are doing to develop and use their people’s skills. Until this issue is tackled, performance and pay will continue to suffer.

“This is reflected in the fact that pay growth remains static for the majority of workers.  Earnings including bonuses may have risen, but this is largely due to the bonuses being more prevalent in sectors such as finance.  Meanwhile, the basic pay measure has fallen modestly compared with last month.

“As our own Labour Market Outlook indicated earlier this week, a tale of two workforces is emerging. Some employees are comfortably exceeding the cost of living in their pay packets and others aren’t getting a pay rise at all.  It’s no surprise to see pay growth remain so stubborn given current productivity levels and the increased supply of workers, especially older workers and EU migrants.  As the figures show this morning, economic migrants make up around forty per cent of employment growth during the past year, driven by an increase of around 25% EU8* migrants in employment”.

Note – * EU8 refers to the 2004 accession countries – who joined the EU in 2004 (Poland, Hungary, the Czech Republic, Slovenia, Slovakia, Estonia, Lithuania, and Latvia

An overview of the latest CIPD labour Market Outlook is available here and the full report is available here

John Cridland, CBI Director-General, said, “The recovery is now established and businesses are continuing to create more full time jobs. While it’s good to see unemployment falling we still need to see more young people finding roles, especially those that help them develop their skills and progress up the earnings ladder. Pay growth is now well ahead of inflation, and a focus on improving productivity from businesses will help keep this on track.”
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