Employment up again as private sector jobs grow on the back of real wage cuts

Press Releases

20 Mar 2013

Despite a small increase in unemployment, another 131,000 extra people found work over the last quarter resulting in another record-breaking level of employment across the UK. Overall, there are now 29,730,000 people in work; 590,000 more than a year ago. That is the highest number ever recorded, although the employment rate (the proportion of the population in work) is 71.5 per cent, still lower than the pre-recession peak due to the growing population.

The growth in employment is driven by jobs in the private sector. Over 150,000 jobs were created in the private sector over the last three months, completely compensating for the loss of 20,000 jobs in the public sector. Over the last year, excluding the transfer of activities from one sector to another, private sector employment has risen by over 700,000 and public sector employment has fallen by over 110,000, mainly in public administration, health and social care (outside the NHS) and the armed forces.

Employment is rising across most of the private sector. Although it is growing fastest in service sectors such as hospitality and professional and scientific services, employment is up in manufacturing too, with 76,000 more people employed than in the past year.

Jim Hillage, Director of Research at the Institute of Employment Studies comments:

‘Jobs have grown much faster in the private sector over the past couple of years than many people expected, whereas jobs have not fallen as fast as predicted in the public sector. One of the reasons why the private sector has been able to increase employment is because real wages are falling, lowering labour costs. Average earnings in the private sector are growing at about half the rate of earnings in the public sector, despite government attempt to hold down pay rates.

‘However, the growth in employment at a time when output is broadly stagnant means that productivity is inevitably falling and the latest figures once again show a fall in output per hour in both manufacturing and the service sector. This is not a good sign for the long-term competitiveness of the UK economy.’


About IES

The Institute for Employment Studies is the UK’s leading independent, not-for-profit centre for research and evidence-based consultancy on employment, the labour market, and HR policy and practice.