GMB: Gary Neville and Edwina Currie clash over employment
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According to data out from the Office for National Statistics the labour market bounced back between August and October. Unemployment now stands at 4.2 percent while the number of people on payroll has risen to 29.4 million, 424,000 more than pre-pandemic levels. There was particularly good news for young people who have been some of the worst hit by the pandemic. For 16 to 24-year-olds employment rates increased while unemployment fell to below pre-pandemic rates. Meanwhile vacancies have climbed to record levels, standing at 1,219,000.
However Head of Economics at the British Chambers of Commerce, Suren Thiru warned the record vacancies showed the pressure businesses were facing with recruitment.
He added: “Staff shortages may persistently constrain economic activity.”
Despite the boom in jobs salary growth has fallen back slightly with annual wage growth now at 4.9 percent.
Inflation meanwhile is currently at 4.2 percent and predicted to peak over five percent next year, reducing any gains in real terms.
Senior Economist at think tank the Resolution Foundation Nye Cominetti said: “The UK has entered a tough new phase of the crisis with plentiful jobs but shrinking pay packets.
“Talk of surging pay off the back of an overheating labour market has been way off the mark.
“Workers are already experiencing a third real wage squeeze in a decade, which is likely to last until the second half of 2022.
Another warning comes in the form of Covid with concerns new Plan B measures could harm firms otherwise looking to recruit.
The Night Time Industries Association have even called for a return of the furlough scheme next year to support the hospitality industry.
Paul Craig, portfolio manager at Quilter Investors warned: “The emergence of the Omicron variant, which looks set to become the dominant strain in the UK very soon, could well derail the progress of the jobs market recovery and put a spanner in the works of continued economic growth, especially within the hospitality sector.
“We are now in the situation where employees are being told to work from home where possible and people may well be too scared in the run up to Christmas to socialise to the extent they may want.”
The strong labour market data comes as the Bank of England is due to decide on interest rates this Thursday.
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The Bank had previously held off raising rates in November, partly due to wanting to see more data on the labour market after the end of the furlough scheme.
Despite the positive figures though many analysts predict the Bank will delay again until the new year given the uncertainty over the economic impacts of Omicron.
Head of Investment analysis at AJ Bell Laith Khalaf predicted a Christmas rate hike was “unlikely” but “barring severe social restrictions” the Bank would likely raise interest rates in February.
Senior Market Analyst at Ebury Matthew Ryan predicted a “February move in rates is coming, with an additional two or three hiked to follow during the remainder of 2022”.
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