Jobs: Further increases in employment “may not reduce unemployment”

This week’s employment numbers from the Office for National Statistics showed an increased number of people working and a small reduction in the headline measure of unemployment.

By David Tooley
Friday, 16th August 2013, 6:00 pm

According to Mark Beatson, chief economist at the CIPD, continued economic growth and job creation does not necessarily lead to sharp reductions in the number of benefits claimants because many of those people generally lack skills for work.

Mr Beaston said: “We can expect some variation in the figures from month to month, but faster economic growth in the second quarter of this year has fed through into more jobs. Forward-looking measures, such as our summer 2013 Labour Market Outlook survey, suggest we should see further increases in employment during the summer and autumn.

“Increasing labour supply means it is likely that unemployment falls slowly in the short-term. The extent to which further economic growth will be possible without triggering a rise in interest rates will depend on how successful the economy is at getting young people and the long-term unemployed into work. If this does not happen, we could see competition for the right people pushing wages and costs up while unemployment remains high.”

The number of 16 to 24 year olds unemployed rose by 15,000 over the quarter to 973,000. With 300,000 school leavers collecting their A-levels this week, and many attempting to enter the workforce, it could be difficult for them to get their first pay packet.

The number of people unemployed for over a year also increased by 7,000 over the quarter to 909,000 even though the number of people in work hit record levels. The CIPD says it usually takes time for falling total unemployment to feed through into falling long-term unemployment.

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