(posted 7157 days ago)Bloomberg.com
U.K. Immigrants, Part-Timers Swell Workforce, Quell Inflation
Sept. 14 (Bloomberg) --Piotr Siciak came to London from Poland in June hoping to find a job. It didn't take the 24-year-old student long: after eight days he was taken on as a bartender in the Prince of Wales, a pub in Kennington, South London.
"There are a lot of jobs going in London," he said, standing outside the pub operated by brewers Shepherd Neame Ltd. "If you work hard you can survive here."
Immigrants such as Siciak are among the more than 7 million part-time and temporary workers bolstering Britain's workforce at a time when unemployment has fallen to a 29-year low. The expansion in the pool of labor helped keep wage growth at half the average pace of the past 30 years. That gives the economy scope to accelerate without fueling inflation, said Peter Robinson, senior economist at the Institute for Public Policy Research, a London- based consultancy.
The government will release wage-growth and unemployment figures at 9:30 a.m. in London tomorrow. Unemployment measured by the number of people claiming benefits was probably 2.7 percent in August, the lowest since 1975, according to the median forecast of 29 economists surveyed by Bloomberg Sept. 10.
"One of the surprises after over a decade of fairly steady economic recovery is that wage inflation remains quite quiescent," said Robinson of the policy institute. "If the supply of labor increases and the economy can grow faster, you'd expect any central bank or government worth its salt to let that happen."
Rising Wages
The globally accepted measure for U.K. unemployment, reported by the International Labor Organization, showed a 4.8 percent rate, compared with 9 percent in the euro region and 5.4 percent in the U.S.U.K. wages, including bonuses, probably rose 4.3 percent in the quarter through July from the year-earlier period, down from 4.4 percent in the quarter through June, a separate survey of 32 economists showed.
The Bank of England said in its inflation report last month that if immigration continues, "further increases in labor demand may be met without firms having to raise wages."
The number of immigrants permitted to remain in the U.K. rose 20 percent last year to 139,675, the highest since 1983, when comparable government statistics started. Many joined the ranks of part-time workers. According to the Organization for Economic Cooperation and Development, 23 percent of the 28 million-strong workforce are part-timers, up from 20 percent in 1990. Across the 30 OECD nations, the rate is 15 percent.
Open-Minded
Record employment and stable wage inflation are bolstering the prospects of Prime Minister Tony Blair, who may call an election as soon as next year. In April, Blair said that while he wants to reduce illegal immigration, choking off the flow of foreign workers "would be disastrous for our country and our economy."Blair's Labour Party led the opposition Conservatives by 2 percentage points, within the three-point margin of error, in a Sept. 7 opinion poll by Populus of 1,009 adults for the London-based Times. In an August poll by Mori for the Financial Times, 7 percent of those questioned cited unemployment as a concern, compared with 30 percent in 1997, the year Blair took office. Mori questioned 1,923 adults.
Tope Hassan, a mother of two from Nigeria, arrived in London last August and works at a South London branch of Marks & Spencer Group Plc, the nation's biggest clothing retailer. She plans to begin studying this month at London's South Bank University, when she'll shift to part-time work.
Nigeria Tougher
"I had the right documentation to get a job so it wasn't too bad," she said. "It's not so easy in Nigeria; they have no job centers. There isn't really part-time work there -- most jobs there are nine to five, Monday to Friday."Employers must be open-minded about where they get staff, said Ruth Hounslow, head of U.K. public affairs at Manpower Inc., the world's second-largest temporary-staffing company. "In Britain, more people than ever are able to access the labor market in the ways they choose," she said. "That flexibility is very healthy."
Marshall Aerospace, based near Cambridge, north of London, employs 120 workers it recruited from the Philippines. The maker of fuel tanks to extend the range of Boeing Co. 747 aircraft, obtained work permits and gave them accommodation.
"Ramping up our permanent staff is a no-no," said Kevin Patterson, who runs the manufacturing division. "Most aerospace businesses use a large amount of contract labor."
Inactive People
Also swelling the potential workforce are so-called inactive people, who aren't looking for a job or aren't available to work. They form a "large pool of labor that could potentially be tapped to meet increases in labor demand," according to the Bank of England. At 7.85 million, that group is at its highest since government figures began in 1984.Average incomes are rising slower than the 4.5 percent rate the Bank of England has said is compatible with stable inflation.
Wage inflation "is not something we're hugely worried about at the moment," said John Telling, head of corporate affairs at Mitie Group Plc, which provides cleaning and catering services and employs about 28,000 U.K. staff.
Pay raises are also being suppressed because of limitations on trade union power since the 1980s and a lower number of bargaining agreements.
While 68 percent of the German workforce and 93 percent of French workers are covered by collective bargaining, in the U.K. the proportion is 33 percent, according to the OECD. In the U.S., it's 14 percent.
Companies are more willing to tell workers to "take a hike if they make excessive wage demands," said Peter Dixon, an economist at Commerzbank in London.
To contact the reporter on this story:
Sam Fleming in London at sfleming5@bloomberg.net.To contact the editors responsible for this story:
Chris Kirkham at ckirkham@bloomberg.net.
Heather Harris at hharris@bloomberg.net.Last Updated: September 13, 2004 19:08 EDT