Comment: Job growth | RBS to sell Coutts?

JOB vacancies may be surging in the recovery, but it looks like people seeking employment – and, indeed, those in work – are unlikely to see any similar jump in wages for some time.

Inflation is likely to be just below the Bank of Englands 2 per cent target until the middle of next year. Picture: PA

A report from the Chartered Institute of Personnel and Development (CIPD) shows private sector median pay settlements in the year to June 2015 are expected to be a relatively subdued 2 per cent.

If, as most City economists believe, inflation is likely to be just below the Bank of England’s 2 per cent target until the middle of next year, it would mean wage settlements would barely rise at all in real terms. Hardly a case for letting the champagne be unconfined.

The good news may be that most indicators, statistical and anecdotal, show recruitment intentions across the UK are buoyant. But the optimism comes with caveats.

It looks like the age of the pay freeze, which arguably lasted from the financial crash to the end of 2012, may be well and truly over as businesses want to remain competitive on staffing to capitalise on the economic upturn.

However, the CIPD data indicate that what became a relatively ubiquitous private sector pay freeze in the downturn – which meant a fall in earnings after inflation – will be replaced by many people treading water through just keeping pace with prices growth.

For many people that will be headway, of sorts – but of the incremental rather than game-changing kind. The CIPD also says less than 40 per cent of employers have done a pay review since the start of this year. Again, that shows we are likely to see measured improvement in earnings rather than any sea change for quite a while.

Meanwhile, other data show that a lot of the boom in vacancies is in part-time jobs rather than full-time. Self-employment has also been on the rise throughout the period of austerity.

Taken together, it could mean any rate rise is delayed. The Bank of England has suggested that one factor influencing the timing of any rise is if the wind of wage growth in UK plc is seen as freshening discernibly.

That is not happening now. In musical terminology, we have a crescendo of job vacancies, but only low-key woodwind on the earnings front.

RBS to cut adrift Coutts overseas business?

ROYAL Bank of Scotland’s confirmation that the state-backed bank is looking at selling the international arm of its famous Coutts private bank chimes with chief executive Ross 
McEwan’s strategy to make RBS smaller, simpler and more streamlined.

Just as RBS’s investment bank has been hacked back, with George Osborne cheerleading, you could argue that Coutts’s overseas lending to high- net worth individuals is a managerial distraction and out of whack with the new stripped-down strategy.

You could go a step farther. Should RBS go the whole hog and sell Coutts in its entirety to make a clean break with the group’s private banking 
activities?

That may have the advantage of securing a better price for the taxpayer in the process. But it is pretty clear that McEwan wants to retain the 
British private bank, and not just for the cachet of a client list ranging from the Queen to football stars and rock musicians.

It is a good source of high-margin business, but without the volatility of earnings and lightning rod for controversy that are often linked to investment banking.