The jobs gap is widening while wages are falling

Today’s jobs figures show growth in the number of people in employment has come to a halt – there has now been no increase in the number of people working since September-November 2012.

However, the Resolution Foundation’s analysis reveals that the true picture is worse than this because the UK needs to create enough jobs to keep up with population growth just in order to stand still.

The Resolution Foundation has calculated the size of the UK ‘jobs gap’ – the gap between the number of jobs that are being created and the number needed to keep a steady proportion of the population employed.

After today’s figures from the Office of National Statistics, the UK jobs gap now stands at 920,000 jobs, up over 90,000 since late 2012.  This means that the UK is now 920,000 jobs short of the number needed to restore the employment rate of 2008, a figure that is now moving in the wrong direction.

James Plunkett, Director of Policy at the Resolution Foundation, said: “It may be too early to say that performance in the jobs market has turned south. But there are certainly worrying signs in this data that the employment picture is starting to soften.

“The reality is that, in a growing population, we need to create jobs – roughly 50,000 a quarter – just to stand still. With employment growth having ground to a halt in recent months, the point at which we can celebrate a genuine jobs recovery is moving ever further into the future.”

Other figures released by the ONS today showed that in the last quarter pay rose by just 1 per cent compared to a year ago.

Gavin Kelly, chief executive of the Resolution Foundation, said: “Pay is now rising at the slowest rate recorded in recent times and well below the rate of inflation – we are in the middle of an unprecedented squeeze on earnings.

“Even before today’s figures our analysis showed that typical earnings will continue to fall until well in to 2014 and it’s likely to be after 2020 before wages recover to their pre-recession levels.  Today’s news makes the prospect for wage-recovery increasingly bleak.”