Private sector jobs rise but pay lags inflation

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The Independent Online

One of the UK's leading recruitment agencies has reported stronger-than-expected growth in private-sector jobs – but many of those jobs are poorly paid and insecure, according to separate research.

The Reed Job Index was founded last year to measure the strength of vacancies. It had an initial index level of 100, and rose by 9 points in January as employer demand rebounded from the winter trough caused by Christmas and the poor weather.

The index now stands at 113, its highest point yet, indicating that employer demand has risen by 13 per cent since December 2009.

In line with the "rebalancing" of the economy sought by the Government, private-sector growth is responsible for this increase, as new public-sector jobs remain at less than half their level of a year ago.

Seventeen job sectors across all areas of the private sector recorded their highest levels since the index was started.

High points were reached in the engineering, construction, manufacturing and scientific sectors, as well as in finance and service sectors such as banking, accountancy, IT, administration and transport. There were also more jobs in growth-support sectors such as sales, marketing and HR.

In contrast, the Reed Public Sector Job Index rose by just 1 per cent compared with December to remain close to its pre-Christmas low of 43.

At the same time, salaries for new jobs stayed flat to give a Reed Salary Index reading of 99. New salaries on offer are down by 1 per cent in real terms since December 2009, and are lagging further behind rising inflation.

However the Work Foundation, a leading employment think-tank, gave warning that it is the "bottom ten million" workers who are still suffering from the weak economy.

The Foundation says that the Government must "expand opportunities" for around 10 million workers already struggling on less than £15,000 a year.

It says that " in-work poverty" is "both a serious social injustice and a major hindrance to the UK's economic performance".

In its latest report, which is entitled Welfare to What? Prospects and challenges for employment recovery, the Foundation argues that "with the greatest falls in employment during the recession concentrated in the largest low-wage sectors and jobs, the Bottom Ten Million remains the group most vulnerable to wage reductions and job insecurity".