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Unemployment Rises For The First Time In Two years

This week the Financial Times reported that there has been a sharp increase in unemployment in emerging markets this year. Unemployment in Brazil has risen from 5 per cent to 6.3 per cent since the start of 2015. In the same period Chile’s unemployment figures rose to 6.6 percent and Russia has seen an increase to 5.9 percent.

And in the UK it seems there is a similar trend. After two years of decline, the Office for National Statistics report that the unemployment rate went up by 15,000 between March and May 2015 an increase from 5.50 to 5.60 per cent.

Despite these figures, salaries have increased. Growth, excluding bonuses, is the largest in more than six years at 2.8 per cent.

So what does this mean? Have things become tougher for businesses again? Is there less incentive or reason to hire? Is stagnant productivity finally having an effect? Are the costs and administration of employing starting to outweigh the benefits again?

The economists suggest that this is generally good news. The recovery of the labour market is changing pace. The rate of job creation is slowing down and wages are rising. In short, the recovery is still going in the right direction as private sector jobs and full time work are expanding.

The government is downplaying the increase in unemployment, with Work and Pensions Minister Priti Patel arguing that there are around 700,000 vacancies currently being advertised. So there are jobs there. The Bank of England also takes the views that the drop in employment is temporary.

If the 700,000 vacancy figure is correct, then it should. But if there are all these jobs available, why aren’t people applying for them or getting them? Labour has said that this shows the government needs to invest more in apprenticeships, although probably more as a quick fix to the current problem than as a long-term solution.

So why aren’t people getting the jobs? As much as the government has pledged to invest in more STEM education and in building relationships between colleges and employers, this will take time to kick in. Britain has developed a reputation over the last couple of decades for neglecting the important jump between education and the workplace. The 90s and 00s focus on getting as many people to university as possible created a bubble that has now burst.

Businesses need to play their part in creating tomorrow’s workforce and many are doing just that. Fortunately more and more schools, universities and colleges are keen to market themselves as having strong links to business, to be the organisation that can get you the career you want. Many are crying out for companies to talk to their students, offer work experience and internships and apprenticeships. The government is offering financial help to smaller organisations prepared to partner with colleges in apprenticeships. The lower minimum wage for apprentices is also an incentive for employers.

Businesses need to play their part in creating tomorrow’s workforce and many are doing just that. Fortunately more and more schools, universities and colleges are keen to market themselves as having strong links to business, to be the organisation that can get you the career you want. Many are crying out for companies to talk to their students, offer work experience and internships and apprenticeships. The government is offering financial help to smaller organisations prepared to partner with colleges in apprenticeships. The lower minimum wage for apprentices is also an incentive for employers.

It is in everyone’s interests to combat the skills problem. Colleges want to do it, the government is encouraging it, and more and more businesses are reaping the benefits of apprenticeships and relationships with universities.

Russell HR Consulting provides expert knowledge in HR solutions, employment law training and HR tools and resources to businesses across the UK.

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