Job growth figures point to ‘two speed’ labour market

Overall jobs growth accelerated in February, but contrasting fortunes in the private and public sectors have given rise to a “two-speed” labour market, according to new figures.

The latest Recruitment and Employment Confederation (REC) and KPMG “Report on jobs” shows that overall jobs growth increased in February with a strong rise in both permanent and temporary placements in the private sector, especially in the IT, engineering and construction sectors. Permanent staff placements increased at the highest rate for 10 months, while temporary positions saw the sharpest rise in almost four years.

However, the nursing, medical and care sectors posted a significant decline from one year ago with a reduction in demand in both permanent and temporary placements.

The report also showed that the rate of inflation of permanent staff salaries eased to a three-month low in February and remained below the survey’s long-run average. Temporary staff hourly pay increased modestly. Where an increase in permanent staff pay was recorded, this was usually linked to increased competition for certain key skill sets.

The latest results of the Markit UK household finance index, included in the report, show that the degree of pessimism regarding security of employment was the highest for three months in February. Among people aged between 18 and 24, job security fell at a rate unprecedented since figures were first collected in February 2009. Only the category of those aged between 45 and 54 reported a sharper deterioration during the latest survey period.

Public sector workers were more downbeat about their job security than private sector employees in February, for the 15th month in a row.

Kevin Green, REC chief executive, said: “The UK now has a two-speed labour market. The private sector continues to hire in increasing numbers while the public sector is shedding jobs.

“We anticipate that unemployment will increase over the spring, summer and autumn before very slowly starting to decline at the very end of this year and into 2012.”

Green called on the Government to help young people that seem to be excluded from the growing number of vacancies, and said that it should “unleash the job-creation potential of SMEs and tackle youth unemployment in its forthcoming enterprise budget. A national insurance holiday of at least one year for every young person employed by a smaller company is an obvious ‘win-win’ for both business and jobseekers.”

For more information on salary levels, see XpertHR’s salary data by sector.

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