By Mark Beatson, Chief Economist at the CIPD
The latest ONS labour market statistics show that we're finally starting to see some positive movement on wages, but this spike in real pay growth may well be short-lived, particularly as it is likely we’ll see inflation rising again later this year. Of greater concern is that we are still not seeing the productivity growth required to make real pay rises sustainable.
Output increased by 0.3% in the first quarter of 2015 and total hours worked in the three months January to March increased by 0.2%, which suggests that the labour productivity figures for the first quarter of 2015, due out on 1 July, will show very slow productivity growth at best.
Employment is still rising, but the growth rate is starting to slow. Job vacancies are up by 82,000 on last year and our own survey, out today, indicates that three-quarters of organisations have struggled with recruitment challenges in the last year, particularly when filling skilled or niche roles. Getting people into work is just half the story. This must be balanced with ongoing investment and development to equip people with the skills they need to contribute to businesses for the long term, keeping both businesses and individuals competitive.
Now is the time for businesses to balance their recruitment efforts with up skilling their workforces and creating an ongoing learning culture in work. We urgently need the government to recognise the importance of getting skills back on the agenda as part of its promise to create a budget for productivity next month.