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Commenting on the labour market figures for August 2018, published today by the ONS, Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said:
“The continued rise in employment and the drop in the unemployment rate is further confirmation that the UK’s jobs market remains in good shape, despite subdued economic conditions.
“With earnings growth continuing to slow, the pace at which pay is exceeding price growth remains negligible, and is therefore unlikely to provide much respite to the financially squeezed consumer. Achieving sustained increases in wage growth remains a key challenge, with sluggish productivity, underemployment and the myriad of high upfront business costs weighing down on pay settlements. As such, there remains precious little sign that wage growth is set to take-off - undermining a key assumption behind the Monetary Policy Committee’s recent decision to raise rates.
“More must be done to support firms looking to recruit and retain staff, including easing the upfront costs on business and addressing the chronic skills shortage, including through the delivery of real reform to the Apprenticeship Levy, so if works better for everyone.”
Commenting on the labour productivity statistics, Suren added:
“Although there was a welcome rise in productivity in the second quarter, it only offset the Q1 decline, and the longer-term trend remains weak at best. The UK’s productivity continues to be hampered by the failure to fix the fundamentals of the domestic business environment, from the growing skills shortage to the chronic underinvestment in infrastructure. There must be a greater focus on boosting growth and productivity, including doing more to incentivise business investment, and greater investment in our physical and digital infrastructure.”