IoD reaction to labour market statistics

Dated: 16 March 2011

Commenting on the latest labour market statistics, Graeme Leach, Chief Economist at the Institute of Directors, said:

“There is both good and bad news in today’s labour market release. The good news is that there doesn’t seem to be any evidence of a wage price spiral developing, with the underlying growth in average earnings (excluding bonuses) actually falling from 2.3 to 2.2 per cent. This clearly helps reduce the upward pressure on interest rates. The rate of growth in average earnings in the private sector is only 2.1 per cent compared with 2.5 per cent growth in the public sector. Given the looming public sector shake-out and pay squeeze this should add downward pressure on overall earnings growth.

“The bad news is that the labour market release isn’t exactly good news for consumer spending. The ILO measure of unemployment is up and employment is only up marginally. Weak employment growth and earnings growth running at half the rate of inflation means that real household disposable income faces a big squeeze. This is the jobless and joyless recovery.”

ENDS

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Notes to editors

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