Unemployment, Figures Look Better but are Slowing

Posted on: 19.05.2010    10:29:20

The latest Recruitment and Employment Confederation (REC) and KPMG Report on Jobs shows further marked increases in both permanent and temporary/contract staff appointments during April, albeit at slower rates compared with March , just as we predicted in our April commentary.

The availability of staff to fill job vacancies continued to rise in April. However, the latest increases in both permanent and temporary/contract staff availability were slower than in the previous month as some market slack is being taken up. Commenting Chris Slay of Skills Provision said “We have noticed a drop off in the pool of Eastern European unemployed available in the UK coupled with an increase in enquiries, particularly in skilled areas such as welders”

Recruitment consultants reported another increase in permanent staff salaries in April. Moreover, the rate of inflation was the sharpest since March 2008. Temporary/contract staff hourly pay rates increased at the fastest pace for just over two years. This is particularly noticeable in areas of skills shortage such as the care industry where the previous government’s action of cutting off recruits from Bulgaria and Romania has exacerbated existing skills shortages within care.

Kevin Green, Chief Executive of the Recruitment & Employment Confederation, says:
“The incoming Government must address two immediate priorities – stimulating jobs growth and reducing expenditure without creating a public sector recession through shedding thousands of posts. Private sector employers have used short-time work, sabbaticals and pay freezes as a means of reducing costs whilst retaining high-performing staff. Innovative resourcing strategies will be equally crucial within the public sector.”

We still believe that this will be a false dawn to overall unemployment if the incoming administration is serious about tackling the bloated and grossly inefficient public sector and we expect the third quarter could easily see unemployment rising again for three reasons.
1. Public sector employees are laid off in their thousands
2. Reduction in demand caused by higher taxation, direct and indirect following the budget on 22nd June
3. Flushing some of the economically inactive back into the employment market.
This, coupled with a public debt level that will be worse than expected, are poor omens for employment.

 

Author: Chris Slay

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