In Focus Commercial Credit
Still more to do to build a strong economy
Despite improved jobs figures, creditors have been warned that points of weakness still remain in the economy
Tej Parikh Senior economist, the Institute of Directors
As January drew to a close, the official labour market statistics from the Office of National Statistics showed that the unemployment rate remained at its lowest since 1975, at 4.3%, while annual wage growth was 2.4%.
Skills gap While the UK’s record employment rate should be celebrated, it must not mask the need to tackle points of weakness in the labour market, such as the skills gap and low wage growth.
The data for September to November
showed that the unemployment rate remained at its four-decade low of 4.3%, while there were 102,000 more in work compared with the previous three months.
Hiring and retention The hiring and retention model, adopted by businesses since the financial crisis, will now be tested. Indeed, there are a number of signs that
these record levels of employment can only last so long. With immigration falling, and limited
Indeed, there are a number of signs that these record levels of employment can only last so long
investment in talent and training amidst hesitance as a result of political uncertainty, our members are concerned about the pipeline of workers with relevant skills.
Strained supply By normal standards, strained supply in the labour market should push up wages, but basic pay grew only slightly to 2.4%, excluding bonuses. This is because businesses – particularly
SMEs which employ 60% of the workforce – are already facing high costs, uncertainty, and have limited productive capacities to raise wages. That, alongside still elevated price levels,
means workers are likely to continue to experience weak real wage growth for much of this year.
Need for more clarity This only emphasises the importance of creating more clarity around securing a transitional Brexit deal in the short-term, and clarifying the government’s ambitions for a future trade deal with the European Union. With this, company owners and managers can get back to investing in their workforce. CCR
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www.CCRMagazine.com March 2018
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