February 2009 UK Employment data – don’t ask for a payrise!

Thursday, April 23rd, 2009 - Article, career management, construction jobs, economics, Education, Employment, salary negotiation, unemployment

UK Employment Data

Resanadita... pero a nuestra economía!
Creative Commons License photo credit: El mundo de Laura

Amid the who-ha of Alastair Darling’s 2009 UK Budget – which burdened every man, woman and child in the UK with £12,000 of debt until at least 2017 – there was the release on Tuesday of UK Employment data to February 2009.

In summary, it wasn’t pretty, but it wasn’t as bad as could have been/was expected.

Basic statistics:
The good news is that unemployment rose at a slower rate than expected. The number of people out of work in the UK rose by another 177,000 to 2.1 million between December and February; while the number of people claiming jobless benefits rose a smaller than expected to 1.46 million. The difference between the two is made up by those who can’t or won’t for various reasons claim benefits. This made the unemployment rate 6.7% for the three months to February, up from 6.1% the previous quarter, the Office for National Statistics (ONS) said.

The black spots with a greater than 10% rate of unemployment were: The Northeast, the West Midlands, and the top of the South Wales Valleys. Should this surprise us that these are also the areas with the lowest levels of mean incomes, the lowest level of housing condition, the highest rate of teenage pregnancies, and the lowest rates of school education? As I said in the UK 2009 budget blog entry, after 12years of a Labour Government, I would expect more on the educational front – these results are just an output of that failure to address educational need.

There were 462,000 job vacancies in the first three months of the year, which was down 68,000 from the previous quarter and the lowest figure since records began in 2001.

Don’t ask for a pay rise:
But the biggest surprise in the statistics: the level of growth in average earnings was the lowest since records began in 1991, and was mainly due to the drop in bonuses in the financial sector. Workers in the private sector saw their wages fall by 0.5% in the three months to February.

“The headline grabber there is the collapse in average earnings [growth]. We all thought if would fall significantly, but it has fallen much much, more sharply,” said Ross Walker from RBS Financial Markets.

“Extraordinary! Bonuses have virtually died a death in the private sector this year as employers cut costs and staff try to hold onto their jobs,” said John Philpott, chief economist at the Chartered Institute of Personnel and Development.

In summary:
As Alan Johnson, the UK Work and Pensions secretary said in various interviews on Tuesday, employment is a lagging economic indicator, and hence will rise further. Most economists suggest to between 3million and 3.5million.

There are no green shoots of recovery being seen yet, but this data from Hudson Contract published in Contract Journal on Construction Subcontractor pay trends in the Midlands for March 2009 suggests stabilisation of pay rates.

We are not near the end of this yet, but we are as Winston Churchill said of the Battle of Britain, at the end of the beginning.

Good Luck!

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