Advertised Salaries fall to a 16-month low despite jobs optimism

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The average advertised salary across the UK has fallen to a sixteen month low, according to the latest UK Job Market Report from Adzuna.co.uk.

The average advertised salary has fallen by 4.1% in the past twelve months, to just £32,323 in December 2013. This equals a drop in wages of £2,136 in real terms, and marks the third consecutive month in which advertised salaries have fallen.

Andrew Hunter, co-founder of Adzuna, explains: “The recovery in the jobs market is far from over. The great news is unemployment has fallen at record levels, but wages are still stuck in a post-recession hangover – while the backlog of employees waiting for the right time to change jobs is clearing, salary levels are yet to catch up. Compared with this time last year, there are fewer people fighting it out for each position, but the chances of securing a decent salary have become slimmer.”

Table 1

November 2013

December 2013

Month Change

Annual change

UK Vacancies

768,289

744,665

-3.1%

+11.9%

Jobseekers per Vacancy

1.59

1.61

+1.3%

-30.0%

Av. Advertised UK Salary

£32,651

£32,323

-1.0%

-4.1%

Salaries across the nation

The salary slide has been felt throughout the country, with annual advertised pay declining in every region aside from Wales during the twelve months to December. The East of England and the West Midlands have borne the brunt of the fall, with the average salary dropping 8.4% and 6.9% respectively in these regions. But Wales has bucked the trend. Salaries in Wales have risen 4.1% over the twelve months to December, reaching an average of £28,121. Salaries in Wales are now at their highest point since August 2012.

Andrew Hunter comments: “The salary picture looks gloomy throughout the country. But some areas are weathering the storm better than others, with Wales leading the way. Initiatives such as Jobs Growth Wales, which has created over 10,000 jobs for young people, are helping to kick-start the regional labour market.[1] As demand for good employees has increased, so has advertised salaries. Wales is further along the curve in this respect than England, Scotland and Northern Ireland.”

Festive season fuels services boom

A few sectors have managed to navigate the salary slump, and witnessed an increase in advertised salary in December.

Salaries in the Hospitality and Catering sector increased 6.6% to £19,234 in the year to December 2013 – the largest increase of any UK sector. The industry also saw a rare monthly increase of 1% from November to December. This follows recent statistics showing that revenues in bars and restaurants increased 5% and 38% respectively over the Christmas period, largely fuelled by corporate hospitality as a result of increased business confidence.[2]

Other sectors to record salary increases in December included Engineering (+5.1%) and the Energy, Oil and Gas sector (+1.5%). In both skilled sectors, a brain drought has led to fewer skilled workers vying for each role and employers have increased salaries as a means to attract talent.[3]

At the opposite end of the spectrum, some of the sectors that have suffered most severely from the salary slump include Healthcare (-3.4%) and Teaching (-1.8%). Public sector cuts have taken a toll on budgets, and salaries have been squeezed as a result.

Andrew Hunter comments: “After years of corporate belt-tightening, the Christmas party season clearly brought some festive cheer to the hospitality sector. Our waistlines may have just about recovered, but the long-term effect on salaries is still being felt.”

Impact of proposed changes to the minimum wage

Adzuna analysis reveals that well over 1 million British employees would be affected if the Government proposals to increase the minimum wage to £7 per hour were to come into effect. Even this move, however, will still leave many Britons well below the living wage across the country.

In addition, recent research estimated that almost two-thirds of hospitality employees earn the national minimum wage,[4] meaning that a significant number in the industry could be in line for a pay rise if the proposed changes were implemented.

Andrew Hunter, co-founder of Adzuna, explains: “For the 1m+ workers affected by this change, the proposed jump in their hourly rate would have a significant impact. But for the remaining majority of our workforce, any improvements are likely to be more gradual. Osborne’s proposals would do nothing to help the squeezed middle, who are still struggling from a cost-of-living crisis caused by inflation.”

Vacancies and competition for jobs

The number of vacancies in December was 11.9% higher than a year ago, with 744,665 positions on offer. This was despite a slight monthly decrease from November, typical of a seasonal slowdown.

Compared to the previous year, competition for jobs fell by almost a third (30%) in December. But compared to the previous month, a slight monthly fall in advertised vacancies meant that competition for jobs increased by 1.3% in December, to 1.61 jobseekers for each advertised vacancy.

Employers have been slower than anticipated to boost workforces in January, demonstrating a delayed recovery from the seasonal recruitment slump. Adzuna data showed that advertised vacancies in late January fell almost 20,000 vacancies short of the record levels seen in November.

A strong North-South divide… but signs of improvement

A prominent North-South divide persists in the labour market. Nine of the top ten cities to find a job were in the South of the UK, and seven of the worst ten cities to find a job still based in the North. Cambridge was the best city in the UK to find a job in December, with just 0.22 jobseekers per vacancy.  It was almost 100 times more difficult to get a job in Salford, the second most difficult city in the UK to find a job (with 20.54 jobseekers per vacancy), compared to Cambridge, the easiest place in the UK to find a job (with 0.22 jobseekers per vacancy).

There are, however, a few signs that the situation is improving for some industrial pockets in the North. Wolverhampton may be the seventh worst city in the UK to find a job, but competition for vacancies in the city is falling rapidly, and has dropped 38% over the last six months, bolstered by a strong service sector, and growing manufacturing and engineering industries.

Likewise, in Sunderland – the fourth worst city to find a job in the UK, and home to the UK’s vehicle production industry – competition for jobs has halved since July 2013.

Andrew Hunter comments: “Several local industry hubs are fighting back. Competition for jobs in both Sunderland and Wolverhampton has eased dramatically since July, as more vacancies have opened up.  Wolverhampton has the added bonus of having growing manufacturing and engineering industries, where business confidence is encouraging investment and boosting salaries.”

adzuna map jan


[1] Welsh government scheme which started in April 2012

[2] D&D/Living Ventures trading statement, December 2013

[3] Professor John Perkins’ Review of Engineering Skills, November 2013

[4] Resolution Foundation study

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Paper Summary: Thursday 16th January 2014

Economics

The World Bank has raised its global growth forecasts for 2014. In a report released yesterday, the institution claimed the world economy had “reached a turning point”, and that developed economies would now be able to generate “self-sustaining growth”. The bank forecasts that global GDP will grow by 3.2% this year, up from 2.4% in 2013, with much of the pick-up coming from developed economies. (The Daily Express, BBC)

 

Personal Finance

Research from the housing charity shelter has shown that 19% of householders borrowed money on credit cards to meet the cost of rent or mortgages, while 2% had taken out payday loans to meet housing costs. Campbell Robb, chief executive of Shelter, said: “Sky-high housing costs, stagnating wages and the high cost of living have taken their toll.” However, Chris Hopkins, Housing Minister, questioned the claims – saying “Shelter’s figures are based on a small number of calls to their helpline, while LSL’s figures show that the numbers of people in severe rent arrears are significantly lower than this time last year, and are 1.6% of the 3.8 million households who rent in the private sector.” (ITV, BBC, Mail, Guardian, Sky)

 

Property

The Royal Institution of Chartered Surveyors (RICS) has said that house price gains “can’t go on”, after revealing that sales have hit the highest level in six years, but that new supply has not caught up. RICS says more homes need to come on to the market soon to meet rapacious demand, or price rises will start to spiral out of control. (Daily Mirror, Graham Hiscott) However, writing in today’s Times, the commentator Peter Franklin argues that more building won’t be enough to keep house prices under control – saying the government should act to control speculation by those who own many different homes.

 

Recruitment

Mark Carney has dealt a blow to Ed Miliband’s mooted plan to limit bank bonuses. The governor of the Bank of England was careful not to be overtly political, but criticised the Labour policy, arguing the idea of a “crude” bonus cap was to blunt an instrument to use in the regulation of financial markets.

Other news in the world of work this morning is that the most fulfilled worker is aged 40 and earns £31,000 a year – and is a woman. Research from recruiter Randstad also found that the most fulfilled industries were construction and teaching, while those in the public sector feel their careers are the least fulfilling.

News Headlines: Wednesday 15th January

Economics

Yesterday saw the announcement that inflation fell to the government target level of 2% in the last month, for the first time in four years. Inflation came in 0.1% lower than in November 2013, helped by the falling cost of recreational goods and services. But slower inflation was partially offset by an increase in motor fuel process, according to the ONS. (Guardian p.20 Metro p.46)

Personal Finance

Research from housing charity Shelter reveals tens of thousands of people are taking out payday loans to cover their mortgages and rent, with one in 50 using high interest credit in the past year. The charity warned that in total, one in five have use overdrafts, credit cards or cash borrowed from family and friends in order to pay for housing in the last 12 months. Shelter surveyed homeowners on their financial worries, and also discovered that a quarter of people would feel too ashamed to get help with housing repayments. The charity also revealed a 30% increase in calls to its helpline over the past year. (Metro p.4)

Property

Released in tandem with the ONS inflation statistics yesterday, the latest house price index from the ONS showed the price of the average UK house rose 5.4% to £248,000 in the 12 months to November. In London, the price rise was more than double that, with the capital seeing a year-on-year increase of 11.6%.

The Metro reacted to this news by heralding housing misery for first-time buyers, with the average first time buyer forced to pay £187,000 – or 6% more than a year ago. Peter Rollings of Marsh & Parsons said: “House price growth has washed over every corner of the UK” but in the Daily Telegraph, Richard Sexton of e.surv warned: “We desperately need more construction in order to prevent the bottom of the market being priced out entirely.” (Daily Telegraph B4, Metro p.47, Daily Express p.28, Guardian p.21, The Sun p.38, The Times p.35)

The Independent Editorial lead with a sceptical view of the ONS figures, arguing that expensive housing distorts the UK economy: “House-builders find themselves in the spotlight. Housing completions have been abysmally low for decades. And whatever David Cameron says, it is difficult to see the Government’s Help to Buy mortgage subsidies boosting supply sufficiently to keep house prices anchored. That is dangerous.” It argued that ultimately, even middle-class homeowners could ‘lose out’ from rising prices (Independent p.2)

Recruitment/Education

‘Skinflint’ bosses who fail to pay workers the minimum wage will face penalties of up to £20,000 from next month say the government – a £15,000 increase on current fines. Business Secretary Vince Cable also said that ministers had made it easier to ‘name and shame’ bosses paying under the minimum wage, and that all calls to the free pay and work rights help line would be investigated. (Metro p.47)

News Headlines: Monday 6th January

Economics

Calling 2014 “the year of hard choices” Chancellor Osborne will today set out plans to slash public spending, cap welfare and create a permanently smaller state after the 2015 election, saying that long-term recovery remains in the balance unless austerity is extended.  This comes as three major business surveys today (from Lloyds, Deloitte, and EEF) indicate that companies are optimistic about their ability to expand and create jobs this year. But in comments that will balance out the current optimism about the UK’s economic recovery, Osborne will highlight that the Government is still borrowing too much and paying too much interest on the national debt, requiring a fundamental change in the shape and nature of the State to enable Britain to once again be able to live with its means. This vision of a smaller state is also key to creating distance between the Tories and the other parties ahead of the election.  Osborne will say that the only way to permanently cut taxes is to permanently cut the spending those taxes pay for. (Telegraph front page, FT front page, Mail p.2, Guardian p.2)

Personal Finance

David Cameron has refused to guarantee universal pensioner benefits such as winter fuel allowance, free TV licenses and bus passes after 2015. Sources at No.10 have indicated that the PM is personally committed to the policy, but faces major opposition within his cabinet. Cameron has already pledged to keep the “triple lock” guarantee that state pensions will rise in line with inflation, wages or 2.5% if he’s elected, meaning that millions can expect an extra £1,000 a year in state pension by 2020.  But pensioner groups say this is worthless if energy prices keep on soaring. The National Pensioners’ Convention said the current £110.15 a week is the second lowest in the developed world after Mexico, arguing that add-ons are essential as British pensions don’t stretch far enough to cover travel on public transport or to heat homes.  (Daily Mail front page, Telegraph front page, Mirror p.2, Express p.2, Sun p.4, Times p.2, Independent p.4)

Property

The rising cost of commuting to and from London by train is eating into the mortgage savings made by living in popular commuter towns outside the capital, according to the latest research from haart.  The estate agents revealed that on average about half of the savings made by living in places such as Cambridge and Leamington Spa are lost on train tickets. The average mortgage saving by commuters was £10,799, compared with the £5,160 price of a season train ticket. Chief executive Paul Smith warned that people need to factor in the spiralling cost of commuting to London, “which may ultimately discourage people from moving out” (Telegraph B5, City AM p.3)

Recruitment

Business leaders have hit out at Labour’s plans to end the UK’s “chronic dependency on low-skill, low-wage labour from abroad”, as Ed Miliband vows to prevent companies from abusing loopholes in EU employment law to hire foreign workers through agencies at cheap rates, instead of British job-seekers. But CBI has claimed that the use of temporary agency workers is perfectly legal and has provided the flexibility needed to keep our economy going through the credit crisis. The Recruitment and Employment Confederation also said that agency workers gained all the benefits of permanent employees (including maternity leave and statuary redundancy pay), despite Miliband’s view that they are locked into a dangerous cycle of low wages, low skills and insecure jobs.  (Sun p.2, FT p.2, Guardian p.6, Times p.7, Independent p.15)

First-Time Buyers Rise 28% Year-on-Year in November as Average Mortgage Rates Fall to Lowest in Three Years

Image

The number of first-time buyers climbed 28% year-on-year in November thanks in part to the lowering of mortgage rates by lenders, according to the latest First Time Buyer Tracker from LSL Property Services.

 

Transactions

Average Purchase Price (£)

Average LTV

November 2013

27,800

£149,404

81.3%

October 2013

26,800

£149,375

81.1%

1 month change

+3.7%

+0.0%

+0.2% (from 81.1%)

3 month change

+5.3%

+1.7%

+1.0% (from 80.3%)

1 year change

+28.1%

+11.4%

 +2.2% (from 79.1%)

There were 27,800 first-time buyer sales in November, 6,100 more than a year ago, showing improvements in the first-time buyer market are gathering even greater momentum.

The average first-time buyer LTV rose to 81.3%, the highest since September 2011, in a sign of the increased availability of mortgages as banks become more willing to lend to those with smaller deposits. As a result the average deposit size fell to £27,942, a 3.4% fall in the past three months, attracting more aspiring buyers back into the market.

Deposits consequently now represent a smaller proportion of first-time buyer incomes, with the average deposit of a new buyer equalling 76.6% of annual income, a 5.8% fall over the course of the last twelve months.

The increase in first-time buyer activity has also been fuelled by the improved affordability of mortgages. In November the average mortgage rate fell to 3.93%, down 0.8% since last year, with banks having being able to pass cheap credit from Funding for Lending onto borrowers.

But there are warning signs ahead, with rising house prices potentially threatening to price the next wave of first-time buyers out of the market. The average purchase price for a first-time buyer rose by 11.4% year-on-year in November, and now stands at £149,403 – up £15,340 in the last twelve months.

Similarly, although the cheaper rates meant that mortgages were more affordable for first-time buyers, the proportion of income represented by mortgage repayments is starting to creep up as house prices rise. Mortgage repayments have increased 0.1% in the past month and 0.4% over the past three months, despite consistently falling mortgage rates.

First-Time Buyer Affordability

 

Average deposit (£)

Deposit as proportion of income

Average mortgage rate

Mortgage repayment as proportion of income

November 2013

£27,942

76.6%

3.93%

21.0%

October 2013

£28,243

77.5%

3.94%

20.9%

1 month change

-1.1%

-0.9%

-0.01%

+0.1%

3 month change

-3.4%

-3.6%

-0.02%

+0.4%

1 year change

-0.4%

-5.8%

-0.79%

-0.2%

David Newnes, director of LSL Property Services, owners of estate agents Your Move and Reeds Rains, said: “There has been a revival in the first-time buyer market over the past twelve months, with sales increasing by nearly a third. Mortgages are much more affordable, which has opened the door to welcome in thousands of aspiring homeowners who had previously been locked out of the market. A boost in economic confidence has attracted more buyers back to bricks and mortar, while banks have equally been far more prepared to lend to those with smaller deposit sizes.

“Rates have fallen, and there is now an array of attractive deals on offer for shrewd first-time buyers, which has made mortgages far easier to secure. The spark has been government schemes like Funding for Lending and the equity loan first phase of the Help to Buy scheme. Although Funding for Lending has been cut back, the mortgage guarantee scheme, second phase of Help to Buy introduced in October, will really kick into gear in the next few months. It will be this that will carry the torch through into 2014.”

“However there is a flipside to the coin. Prices are rising and there is simply not enough housing stock to match continued demand, meaning this will continue well into 2014. If demand is not satisfied by supply, then sustainable growth will be hampered and future first-time buyers will once again be left out in the cold. We need far more homes, particularly at the lower end of the spectrum if we are to sustain a healthy property market.”

On a regional level, there continues to be disparity across the UK with stark differences throughout the country in property values, deposits required and mortgages taken out for those entering the property market. In the three months to November the South East saw the greatest number of first-time buyers, with 15,600 sales across the region, closely followed by London at 13,400. This is despite the fact that first-time buyer properties in the capital and the South East have required the largest average deposits, at £67,623 and £37,788 respectively.

By comparison, in the North West first-time buyers only require an average deposit of £15,791 with an average purchase price of £112,820. This therefore means that new buyers in these Northern regions only have to take out an average mortgage of £97,508, whereas by comparison those in London have an average mortgage of £208,448.

Wales in particular has experienced uplift in first time buyer activity, largely to a required average deposit of just £11,683 and purchase price of £107,038.

David Newnes, director of LSL Property Services, owners of estate agents Your Move and Reeds Rains, concludes: “Although a flag has been planted in the nationwide recovery, up and down the country we are seeing contrasting fortunes for first-time buyers eager to enter the property market. Price rises in the capital and South East are surging ahead of those in the rest of the country, and the resulting deposits needed to get onto the ladder are following suit. Buyers in the North are faring better in this respect. They have less of a mountain to climb to reach the summit of the required deposit.

“However, while potential homeowners in Northern region have smaller deposits to accrue, they are – as a whole – less cash-rich than those in the capital and the surrounding areas, which therefore necessitates them taking out higher LTV mortgages. With many anticipating a rise in interest rates next year, many new homeowners across the country will feel a greater pressure on their finances – especially with repayments as a proportion of income starting to creep up.

“It is startlingly evident that while the UK-wide latest phase of the Help to Buy scheme is having a positive effect, a more tailored and less of a ‘catch all’ approach is needed.  One that meets the varying needs of aspiring buyers across the regions. This will be crucial in alleviating the regional disparity and preventing the wall of obstacles that first time buyers have to scale from mounting further.”

News Headlines: Sunday 29th December

Recruitment

Sir Stuart Rose has trumpeted the benefits of foreign workers in an interview with the Sunday Telegraph. The Ocado chairman and former M&S Chief Executive told the paper that “we do need labour in this country…and by and large, they’re hard workers”. He cites the question of Bulgarians and Romanians coming to work in Britain as simple free market economics and also part of the “club rules” of EU membership. The Mail on Sunday writes on a Home Office commissioned report into the impact of immigration from the two countries, with high prominence and speculation given to potential negative aspects including pressure on schools, hospitals and the welfare system. However little mention is made of the fact the report states immigration will have a positive impact on the UK economy.

Economics

The Eurozone is heading for a Japanese style deflation trap according to Pacific Investment Management Company, the world’s largest bond fund. It cites deflation as the biggest single threat to the currency bloc over the next year, due to combination of a strong Euro, slow reform and a “paucity of ambition”. Acceptance of high unemployment and low growth is risking further decline, posing a risk to high street spending, declining profits and lower wages. Greece is currently the worst affected, with deflation of 2.9%.

Property

A major report from the Sunday Telegraph into the UK property market in conjunction with RICS and Savills has found the London price boom is benefitting the rest of the country with prices expected to rise 8% across the country in 2014. The report asserts that London is the main reason why the UK property market doesn’t resemble those of Spain or Greece. And despite house prices in the capital rising at 28% over the past year, the report finds it is not out of control and that the rises are firmly tethered to responsible lending and a large number of cash purchases.  Rises of 7% in prime London properties are outstripped by rises in almost every other major world city, with Sydney seeing rises of 8.4%, New York at 11.1%, Dubai at 21.8% and Jakarta at 27.2%.

Personal Finance

Gloomy news from Which? as a survey finds more than half of people feel their finances are going to come under increased pressure this year and 60% are “dreading” their energy bills this year. According to the research, a quarter of people relied on borrowing to pay for Christmas

Daily Newspaper Summary: Friday 27th December 2013

Economics

Fears of a festive slump across the retail sector were dispelled on Boxing Day as sales delivered a Christmas boost to Britain’s retailers. More than £2.7 billion was spent in stores and at online retailers across the UK with many shops reporting their busiest Boxing Day to date. Around 1.4 million shoppers were expected to have spent a total of more than £50 million in London’s West End yesterday. The Daily Telegraph, front page and everywhere else.

Personal Finance

The current strength of the pound is making exotic holiday destinations such as Bali and South Africa ore affordable as Brits find that their money goes further. The stronger sterling is giving Britons up to 28 per cent more spending money abroad this month, compared to this time last year. The Times, pg 21; The Daily Mail, pg 49

Fifty per cent of pensioners want higher interest rates to counteract the disastrous effects of years of low returns on their savings. Fifty per cent of the over sixties say a rise in interest rates would make them better off, according to a survey. By contrast, just seven per cent say they would be worse off. The Daily Mail, pg 18.

Property

There is currently a boom in sales of £1 million + houses  which have risen by ten per cent above the previous peak they of 2007, with 9,700 transactions at that level, according to Hamptons International’s analysis of Land Registry data. London accounted for around 70 per cent of £1 million + house sales this year and according the research new hotspots have emerged over the last six years with Battersea and St John’s Wood both moving into the £1 million + top ten. The Times, pg 11; The Daily Mail, pg 37

Britain’s high end housing market risks falling into a “zombie zone” as political rhetoric against foreign investors builds in the run up to the general election. George Osborne utilised his autumn statement to kick off the Tory party’s re-election aspirations with a crackdown on wealthy foreign homeowners who will be liable to pay capital gains tax in future. Ed Mead, Director at Douglas & Gordon, said the market was likely to fall into a zombie state, with a slowdown of growth at the top end of the market generated by uncertainty. The FT, pg 2.

Recruitment / HR

According to an exclusive in The Mirror staff in just three governmental departments pocketed more than £15 million in bonuses last year. £6.5 million of tax payer money was dished out to Home Office workers alone, 44.9% higher than the previous year. The Mirror, pg 6.