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February 20, 2013 12:00 am
Employers are less likely to make staff redundant than in the past, a factor that helps explain Britain’s “productivity puzzle” of rising employment in a stagnant economy. It also “bodes ill” for economic growth prospects, a leading labour economist has warned.
In a report published ahead of Wednesday’s unemployment data, John Philpott, director of the Jobs Economist consultancy, said 3.5m had been made redundant since 2008, or one in seven of those in work at the start of the recession.
Almost two-thirds of those losing their jobs were men, though the past two years had also been difficult for women because of public sector spending cuts.
However, although redundancy rates spiked in 2008-09, they had since been lower than in the late 1990s and early 2000s, when the economy enjoyed a relatively healthy rate of growth.
Mr Philpott said the lower level of redundancies was often attributed to more co-operative employment relations and pay restraint triggered by the financial crisis, labour hoarding by employers, or “zombie” companies kept alive by very low interest rates.
But the fact that the underlying redundancy rate fell some years before the recession suggested that the trend “is in fact symptomatic of a longer term structural change ... which has resulted in a lower propensity to make staff redundant”.
Mr Philpott said the causes of lower redundancy rates, which include a long-term squeeze on real pay making labour relatively cheaper, therefore slowing the pace of business restructuring, were also likely to be relevant to the recent fall in labour productivity.
Although bad news for individuals, redundancies could be an indication of competition and structural change that brought benefits for consumers and the economy, he said.
The redundancy rate rose in the late 1990s and early 2000s as employers took advantage of new information technology and responded to globalisation by moving more work overseas.
But the rate fell from 2002. One reason may be that organisations had reached “optimal” staffing levels, but it also coincided with slower wage growth, which reduced pressure to cut labour costs.
In a separate study, the Trades Union Congress, said women in their 50s suffered the biggest gender pay gap, earning almost a fifth less than men of the same age. The TUC found that full-time female workers in this age group earned an average of just less than £12 an hour, compared with £14.69 for men.
Women in their 50s also earned less than women in their 30s. The TUC said half of women in their 50s were in part-time jobs, with most earning less than £10,000 a year.
There has been a huge increase in women working past the age of 50, but the TUC voiced concern about the quality of jobs they were offered.
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