In the September edition of the ‘London’s Economy Today’ GLA Economics report that a number of economic indicators released are indicating that the worst of the recession may now be over. The improving economic news has heartened the City with the FTSE 100 breaking through the 5000 mark for the first time since September 2008. KPMG and the Recruitment and Employment Confederation have also found signs that the UK job market may be beginning to be slightly less pessimistic with them discovering “marginal increases” in appointments in August.
However, in counter-balancing news the British Retail Consortium estimated that UK like-for-like retail sales fell by 0.1 per cent in August compared to the previous year indicating that the economy is far from out of the woods, whilst in Central London like-for-like sales were reported to have declined by 5.9 per cent. Stephen Robertson, Director General, British Retail Consortium, said in relation to the London figures: “these results don’t suggest the recovery is under way. This is the lowest London sales growth since August 2005”.
Further the OECD has revised down its forecast for the UK economy this year from a contraction of 4.3 per cent of GDP to 4.7 per cent. Despite a recent pick-up in house prices, the Ernst and Young ITEM club has predicted that house prices will fall by 1.6 per cent in the first half of 2010 and take five years to reach their 2007 levels.
Mervyn King, the Governor of the Bank of England warned on 15 September that the “strength and sustainability” of the recovery is still “highly uncertain”. With UK unemployment hitting a 14-year high and evidence for only a future sluggish recovery for London’s economy it is likely that business conditions in the capital will remain tough over the next year.
Looking at evidence from vacancies taken by Central London Connexions (from 1st April to 20th September 2008 and same period this year):
- Overall vacancies (ie vacancy cards on the notice board) are down from 365 in that period 2008 to 233 in same period this year - we are about a third down.
- Most sectors have been hit, for example office work (94 vacancies Apr-Sept 08, 51 same period this year), retail (down from 50 to 34) and hairdressing (41 to 17).
- Apprenticeship have held up well and actually increased particularly engineering and public sector 85 Apr-Sept this year, 78 same period last year.
National Minimum Wage increase
The NMW rate is reviewed every year and any changes take place on 1 October. This year’s recession hit increase has been a modest one, with the under 18 rate going up just 4p.
However, even this small raise has not been unanimously welcomed. In its submission to the Low Pay Commission, which will recommend the rate, the British Chambers of Commerce says that the recession has seriously affected the employment of 16 and 17-year-olds. It forecasts that one in three will be jobless next year - perhaps not that surprising in a recession:
"The economic reality means that the national minimum wage rate should no longer be seen as a 'one-way bet', and serious thought should be given to whether this rate is now pricing these young people out of employment and possibly into a life of welfare-dependence," the BCC wrote in its letter to David Norgrove, the commission's chairman.
The rates from 1 October 2009 will be:
• £5.80 an hour for adults (workers aged 22 and over) – up from £5.73
• £4.83 an hour for workers aged 18 to 21 inclusive – up from £4.77
• £3.57 an hour for young people (under 18) – up from £3.53
Trevor Bottomley
Employment & Labour Market Adviser
Central London Connexions
October 2009