Author Profile Picture

Cath Everett

Sift Media

Freelance journalist and former editor of HRZone

Read more about Cath Everett

News Analysis: ‘Glimmers of hope’ for jobs market as incomes set to drop

moneygrabber

While there are “glimmers of hope” that the jobs market may revive somewhat over the next year, real household incomes are in contrast expected to fall by 7.4% over the next 36 months.

The Recruitment & Employment Confederation’s JobsOutlook report for November, which is based on a survey of 600 employers, revealed that, although employers are likely to remain cautious about taking on permanent staff until the end of the year, some 54% intend to do so in the next three months and 59% over the following 12 months.
 
A further 35% also indicated that they would keep headcount static during next year, a dramatic 20 point leap when compared with sentiment in October.
 
Roger Tweedy, REC’s director of research, said: “Despite latest forecasts pointing to slower economic growth, there are at least a few positive signs for the jobs market. Permanent employment opportunities will remain constrained in the short-term, but long-term hiring intentions provide glimmers of hope.”
 
Despite the Agency Worker Regulations coming into force in October with their expected resultant squeeze on demand, the “early signs” were that the appeal of temps and contractors remained strong.
 
Some 28% of employers surveyed said that they would increase the size of their agency labour pool over the next three months, while 52% planned to keep it the same. Over the next 12 months, however, some 83% anticipated either boosting numbers or maintaining them at current levels.
 
Tweedy believed that the figures reflected a recognition by employers of the benefits that temporary staff could bring in supporting seasonal demand as well as business peaks and troughs during uncertain economic times.
 
Worryingly, however, nearly a quarter of private sector firms said that they still expected public sector cuts to have a serious impact on their business, although 15% said that they should have no further effect from now on, up from 6% last month.
 
Falling incomes
 
The Institute for Fiscal Studies, indicated, meanwhile, that the Chancellor’s economic plans would result in a sharp fall in household income, dropping by an average of 7.4% between fiscal year 2009/10 and 2012/13.
 
Following George Osborne’s Autumn Statement, the economic research body said it believed that the median average income was set to stagnate, which meant that it would be no higher in real terms in 2015/16 than it was in 2002/03.
 
In fact, the IFS’ director Paul Johnson, told the BBC that he was “running out of superlatives” to describe the current economic climate and the Chancellor’s strategy.
 
“Downward revisions in the outlook for tax revenues, fiscal rules expected to be met by the merest whisker, investment spending plans being cumulated over several years, a complex array of small policies aimed at promoting growth, fiddling with tax credits, backing away from pre-announced increases to fuel duties,” he said.
 
What this all meant was that Osborne’s second Autumn Statement had “more in common” with some of Mr Brown’s Budgets and pre-Budget reports than either of them would care to admit, Johnson added.
 
The IFS report also revealed, however, that the average public sector worker now earns an average of 7.5% more than their private sector equivalent, with males in state jobs enjoying a premium of about 4.3% and females about 10.5%.
 
The discrepancy had come about because of comparatively high pay awards given to public sector workers in 2008 and 2009, while much of the private sector was subject to pay freezes, the Institute said.
 
A separate report published by right-wing think tank, Policy Exchange, likewise put the average pay gap at about 8.9%, rising to 16% at the lowest end of the pay scale. It said that a typical public sector worker would earn £1,900 more per year than a comparable private sector employee.
Author Profile Picture
Cath Everett

Freelance journalist and former editor of HRZone

Read more from Cath Everett
Newsletter

Get the latest from HRZone

Subscribe to expert insights on how to create a better workplace for both your business and its people.

 

Thank you.

Processing...
Thank you! Your subscription has been confirmed. You'll hear from us soon.
ErrorHere