Analysis: Britain bears costs of jobs without growth

Mon Oct 8, 2012 7:25am EDT
 
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By Olesya Dmitracova

LONDON (Reuters) - A near-record number of Britons are in work despite a shrinking economy, but new employment has come at the expense of pay and job security, capping any boost to vital consumer spending.

Britain's economic output is now 4 percent lower than in the first quarter of 2008, just before the slump that followed the global financial crisis, while the number of people in work has risen to 29.56 million, close to an all-time high.

But the new jobs, many of which are precarious and low-paid, have failed to encourage consumers to spend, blunting the boost to the economy higher employment normally provides.

Jobs growth may also run out of steam. Disappointing recent data has dimmed hopes of a meaningful economic recovery in Britain, which has been mired in recession since late last year.

For now, thousands of Britons are having to accept either a fall in real income, low job security or having to toil more for the same earnings just to stay in work.

"Wages staying quite low and below inflation prices people into work," said Kevin Green, head of the Recruitment and Employment Confederation, which represents Britain's recruiters.

"Employers are trying to keep their fixed costs down ... Whereas we used to see lots of temps, flexible working happening in the low-skill, retail, office professionals type-of-activity, we now see that growing in the professional groups."

'Jobs without growth' has been a conundrum for economists in the past year, translating into a steep fall in productivity which even the central bank struggles to make sense of.   Continued...

 
Commuters walk towards the financial district via London Bridge, three days after the end of the London 2012 Olympics August 15, 2012. REUTERS/ Ki Price