Growth in pay and employment ‘provide festive sparkle’

But longer term growth needs to focus on productivity, says CIPD

Pay growth has risen above inflation for the first time in six years as earnings excluding bonuses increased by 1.6 per cent in October 2014, official figures showed.

Office for National Statistics data showed that its second measure of earnings, which includes bonuses, had grown by 1.4 per cent, which is also above the inflation rate of 1.3 per cent (Consumer Prices Index).

Employment grew to 30.8 million people in work and unemployment fell to 6 per cent for August to October 2014 from 6.2 per cent in the quarter before and 7.4 per cent a year earlier.

There were 22.54 million people working full-time, 560,000 more than a year earlier and 8.25 million people working part-time, 28,000 more than the year before.

Gerwyn Davies, CIPD labour market adviser, said: “The headline employment figures provide a lot of festive sparkle given the improvement in the quality and quantity of jobs that have been created over the past year. However, while average earnings have moved up a little in the last few months, this will not be sustainable unless we can improve our productivity.”

Pointing to the latest CIPD research on megatrends in UK employment and productivity Davies said that UK management is one area where the country is falling behind its international competitors.

“It shows that managers are failing to adopt many of the sophisticated management practices associated with higher levels of productivity. With anywhere between 30 and 45 per cent of employees having some type of managerial responsibility, there are many small but simple improvements each manager can do to make a big difference to the growth prospects of UK organisations. If these practices were adopted more widely, the prospect of real wages accelerating sustainably against the backdrop of low inflation would offer a welcome change of fortunes for people in work in 2015.”

Commenting on the ONS figures, Nigel Meager, director of the Institute for Employment Studies, said: “It is interesting to note that the most recent growth has been mainly among full-time employees, and that both part-time employment and self-employment have fallen in the last few months. This suggests that some of the ‘under-employment’ which was a feature of the earlier stages of the economic recovery, may at last be being replaced by full-time jobs.”