CIPD: Employment market 'not heating up'

13-09-2006

Despite figures from the Office for National Statistics (ONS) showing a fall in the number of those claiming benefit due to unemployment in August, the labour market has in fact been cooling in recent months, the Chartered Institute of Personnel and Development (CIPD) has claimed.

The fall in claimant unemployment was modest and out of line with the previous trend, CIPD chief economist Dr John Philpott said, as well as being at odds with the Labour Force Survey, which showed rising unemployment.

Although the demand for labour has not weakened, with vacancies rising and redundancies remaining low, the greater unemployment reflects a rise in the size of available labour pool, he claimed.

Around half of the growth in the labour pool was down to an influx of migrant labour, he claimed, while the rest was down to more groups such as lone parents and long-term sick re-entering the market.

"This boost in labour supply relative to demand is depressing the underlying rate of growth in average earnings," he commented.

"For the time being therefore the labour market poses no threat to the government's inflation target, though it remains possible that higher living costs will trigger bigger wage demands in the busy autumn and winter pay rounds."

Dr Philpott also pointed out that the ONS figures showed that older workers were enjoying the biggest increase in employment, contrary to reports claiming older workers were being dropped ahead of new age discrimination laws.



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