Success of The Few at the expense of The Majority:
Increases in Pay and Unemployment in last Quarter of 2010.
The country’s unemployment rate increased to 8% during the final three months of 2010, with the number of unemployed people increasing by 27,000 over the quarter to rise to the highest unemployed populace since 1994 at 2.53 million. However, the annual growth rate for total pay increased to 2.3% for the same period, a remarkable jump from the 1.8% recorded for the three months to December 2010. This increase was primarily driven by bonuses in the finance and business services sector.
How?
The unemployment rate increase was primarily driven by a 0.8% increase in the number of unemployed young people aged between sixteen and twenty four who are looking to forge their careers in this lengthening recession. In cold figures, the number of ‘economically inactive’ 16-24 years olds increased on average by 10,000 a month during the last quarter to a total of 974,000 and the highest figure since comparable records began in 1992.
The total unemployed rates were also split between the sexes during the quarter with the number of men claiming Jobseeker’s Allowance falling again for the thirteenth consecutive month by 17,500 during January 2011, whereas female claimants rose for the eight consecutive month to 7,300 during the same 31 days.
Why?
The uncertainty in the economy is leading to many employers hesitating on whether to undertake the risk and expense process of full-time recruitment. Indeed, Legal & General Investment Management team found that over “50 per cent of UK consumers believe that unemployment will continue to rise over the next twelve months”.
Her Majesty’s Treasury collated 25 forecasts from leading global financial institutions for the 2011 economy. The fluctuations in the predictions for GDP Growth rates during the year are indicative of Business Owners’ trepidations; recording forecasts between 1.3% and 3.1%, at a mean average of 1.8%.
The Result – Work Experience & Internships
An answer in reducing this risk is to select those with long established careers behind them and dispense with additional training. However, these professionals often arrive with increased salary expectations, to meet mortgage and other financial commitments.
Julia Margo (Acting Director of Demos) stated last year that it was her belief that 80% of graduates would be undertaking a work experience placement, the result being that ‘our economy is now secretly running on intern power...[and] what we actually need to do is increase the number of internships being offered’.
It is not merely graduates who are fighting for the available work experience placement; Mary Curnock Cook, chief executive of University and Colleges Admission Service (UCAS), has advised would-be undergraduates to delay their applications by looking at going into work or using internships as the shortage of university places continues for this year’s school leavers.
Benefits to Firms:
The recession has led to firms making necessary redundancies to reduce their fixed costs. However, in order to remain competitive, each firm must maintain or improve the standard of service that they have built their reputation upon. Students and graduates are able to meet firms’ administrative and primary requirements without necessarily adding to their fixed costs.
Typically, at the beginning of a recession firms reduce their bottom layer; typically comprising of young people and part-time employees. However, when the blue sky emerges, such employers find that they need to recruit quickly; finding themselves without a foundation, and leading to senior employees on high payable rates undertaking unprofitable tasks at no benefit or learning to themselves. Further, if these employees should choose to leave, perhaps demotivated by a pay freeze policy, then there is a gap that will require both recruitment and training to fill.
By taking on a work experience intern, even on a short-term basis, a new energetic influence to the business is introduced with a fresh perspective and new and innovative ideas that could prove beneficial to their practices. In addition, it meets corporate social responsibility targets in enhancing that student’s chances of gaining employment in the industry they pursue whilst providing your firm with a willing employee. As the former Prime Minister stated, it is about ‘encouraging a whole generation of young Britons to embrace ambition and British enterprise’.
The Future:
It is our firm belief that British Businesses will adopt a more flexible workforce in the future with a greater degree of ‘hot-desking’, outsourcing, consultancy and part-time roles on offer to embrace the flexibility offered by modern technology and constrictions of legislation and increased tax charges. The result is that the talented who can show talent and a varied employment history, amongst those who can afford to attend University, will be most likely to benefit.