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Employment rate remains at 74.8%

Estimates from the Labour Force Survey show that, between November 2016 to January 2017 and February to April 2017, the number of people in work increased, the number of unemployed people fell, and the number of people aged from 16 to 64 not working and not seeking or available to work (economically inactive) also fell.

There were 31.95m people in work, 109,000 more than for November 2016 to January 2017 and 372,000 more than for a year earlier.

The employment rate (the proportion of people aged from 16 to 64 who were in work) was 74.8%, the joint highest since comparable records began in 1971.

There were 1.53m unemployed people (people not in work but seeking and available to work), 50,000 fewer than for November 2016 to January 2017 and 145,000 fewer than for a year earlier.

The unemployment rate (the proportion of those in work plus those unemployed, that were unemployed) was 4.6%, down from 5.0% for a year earlier and the joint lowest since 1975.

There were 8.85m people aged from 16 to 64 who were economically inactive (not working and not seeking or available to work), 30,000 fewer than for November 2016 to January 2017 and 74,000 fewer than for a year earlier.

The inactivity rate (the proportion of people aged from 16 to 64 who were economically inactive) was 21.5%, down from 21.8% for a year earlier and the joint lowest since comparable records began in 1971.

Latest estimates show that average weekly earnings for employees in Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 2.1% including bonuses, and by 1.7% excluding bonuses, compared with a year earlier.

Latest estimates show that average weekly earnings for employees in Great Britain in real terms (that is, adjusted for price inflation) fell by 0.4% including bonuses, and fell by 0.6% excluding bonuses, compared with a year earlier.

Doug Monro, co-founder of Adzuna, said, “A general election that was supposed to provide greater clarity has instead plunged the country into further uncertainty. However, the jobs market has emerged relatively unscathed from previous problems in the last year or so and the early signs are that it is proving its mettle this time round. More than 300,000 new job listings have been posted on Adzuna since Friday, proving that the hung parliament hasn’t deterred employers looking to plug gaps or expand.

“The number of UK vacancies currently sits at its highest level since 2015 and the employment statistics have been a beacon of hope among other gloomy economic indicators, not least inflation rising to a four-year high today.  Sectors such as tech are helping underpin the buoyant jobs market – Google recently submitted planning permission for its new London campus and PWC has launched a technology-degree apprenticeship – but we need to ensure that the Brexit we negotiate doesn’t negatively impact on overseas talent helping to fill these roles.

“With cabinet reshuffles and the election fallout ongoing – not to mention Theresa May’s role being under some threat – we could well see an increase in the number of politicians searching for gainful employment in the coming days and weeks.”

totaljobs’ director, John Salt, commented, “The fact that the UK’s unemployment rate has once again fallen - despite the uncertainty caused by the General Election - is testament to the robustness of the job market.

“This is the latest triumph for the UK job market, which has proved its metal in the face of great change these past twelve months.  Brexit, a change in Prime Minister and a snap election has done little to halt consistently positive numbers for UK unemployment.

“Our most recent Totaljobs Employment Index showed that jobs were up 9% year-on-year in May and up 5% when comparing the last three months with the same period last year. Certain sectors have done particularly well in the last twelve months. The Catering & Hospitality sector, for example, is up 57% year-on-year, a remarkable rate of growth by any estimate.

“As we watch to see how the newly formed government will fair in the Brexit negotiations, continued flexibility is important for candidates and employers alike as we all get used to our new circumstances. In the next 12 months, employment policies that encourage businesses to keep on hiring will be more important than ever in sustaining our falling unemployment rate.”

Phil Sheridan, senior managing director at Robert Half, stated, “While this is a step in the right direction, organisations must not get complacent.

“Business success hinges on a motivated and productive workforce. Yet, rising workloads, a growing talent shortage and workplace digitisation means that today’s workforce is ripe for disruption.

“However, with high employment, brings new challenges. Our research shows that 81 per cent of human resources directors have concerns about losing a top performer as the competition for talent intensifies.

“To continue driving productivity rates in the right direction, businesses need to prioritise initiatives designed to boost job satisfaction and retain employees in the long-term. For example, by recognising employee success, giving clear direction and having open communication it’s possible to foster a culture where employees feel pride and appreciation in the workplace, helping create more fulfilled staff that consistently deliver the output the UK economy needs.

“Ultimately, a business is the sum of its parts. Without a continued focus on maintaining staff productivity, organisations will quickly fall behind.”

Jobsite CEO, Nick Gold, added, “It’s no surprise to see unemployment numbers continue to fall, as we’ve seen vacancy numbers thriving in the second quarter of 2017. Despite job seekers having more choice, we’re still seeing job application numbers continue to increase at a significant rate. This is great news for recruiters because it means there is a larger pool of talent to choose from and ultimately this creates a sustainable environment for business growth.

Employers should take this opportunity to invest time in their hiring process to ensure they’re able to find the best possible fit for their company. Candidates should see this as an opportunity to refine their job search and take steps to guarantee their applications are standing out.”

Ian Brinkley, acting chief economist at the CIPD, said, “The figures confirm that real wages have fallen again, the third month in a row, as measured by average weekly earnings. This trend is likely to persist, as CIPD labour market surveys show that most employers expect to offer basic pay awards below the rate of inflation. The sharp fall in earnings growth is remarkably broad-based, which is due to a combination of persistently low productivity growth and a fall in confidence among employers about the future prospects for demand in the UK economy. The better news is on the employment side, where unemployment has fallen and employment growth is almost entirely driven by more full time and permanent jobs.

“The only sustainable solution to weak pay growth is to address the fundamental cause, which is the UK’s poor productivity performance. The new government should not allow the current short-term political uncertainty and looming Brexit negotiations to distract from the need to address key issues, such as managerial quality, skills development for the whole workforce, and work organisation and progression. We hope that the Queen’s Speech will include a commitment to draw up a new long-term productivity plan based on consultations with a wide range of industrial and professional organisations and trade unions, including a clear focus on the workplace.”

Mariano Mamertino, EMEA economist at Indeed, commented, “Each successive fall in unemployment is looking like an ever more hollow victory. 

“For several months - and throughout the election campaign - the greatest concern over the labour market has shifted from those who are out of work to those who are in work, and how their living standards are being steadily squeezed.

“The reason is pay rises are no longer just being outpaced, but left behind, by accelerating inflation.

“Consumer prices have risen by 2.9% in the past 12 months, yet by April average wages were creeping up at just 1.7% a year.  

“That gaping mismatch will inevitably morph from a source of pain for workers into a threat to the wider economy. Real wages aren’t just falling - they’re stuck in reverse - and this risks undermining Britain’s increasingly fragile economic growth.

“Nevertheless there is hope. The rate of job creation continues to impress and inactivity rates are falling. With employment rates at their highest level since records began, employers in many sectors are competing hard to secure the best talent.

“The latest data from Indeed reveals that nearly a quarter of civil engineering jobs, 22% of legal roles and 18% of healthcare vacancies are taking more than two months to fill.

“As the number of such ‘hard to fill’ roles increases, employers will tend to increase the salaries they offer new recruits. This tightening of the labour market will nudge up average wages in some areas but there is a long way to go to ease the pain of Britain’s worsening squeeze on living standards.”

Neil Carberry, CBI director of employment and skills, said, “Decent employment growth remains an encouraging feature of the UK economy, underlining the importance of maintaining a flexible and fair labour market.

“But weak pay growth, against the backdrop of rising inflation, means that people’s pay packets won’t stretch as far, which is already hitting living standards.

“Therefore politicians need to put the economy front and centre, create stability and ensure the EU negotiations get off to a positive start. In the longer term, we must fix the foundations of our economy by improving productivity growth through meaningful progress on a modern industrial strategy, with real change on the ground in skills, infrastructure and innovation.”

Recruitment & Employment Confederation chief executive, Kevin Green, stated, “The jobs market continues to perform above expectations. There are 372,000 more people in work compared to a year ago, and the proportion of the population participating in the labour market is at a record high.

“This is good news, but there are pressing challenges for employers. Our data shows that employers are struggling to fill jobs because of labour, skill and talent shortages. A few years ago it was the case that businesses in particular specialist sectors such as IT and engineering had to contend a lack of people to fill vacancies, but now that problem is rife across the economy.

“Clearly, employers will be thinking about contingency plans if they can’t find the people they need in the UK. The government’s role should be to help businesses by building a balanced immigration system. We also want to see a rethink on the apprenticeship levy so that it goes beyond training people at the start of their careers and enables life-long learning.

"The latest official data shows that after accounting for inflation, real wages have dropped by 0.6 per cent excluding bonuses compared to a year earlier. 

“For the second consecutive month the data shows a drop in real wages, and people will be feeling the impact of having less money in their pockets. Our data shows that employers are increasing starting salaries to attract applicants, so moving jobs looks like the best way to secure a pay rise for people willing to take the associated risk at a time of economic instability.” 

Nigel Meager, director of the Institute for Employment Studies, commented, "The latest employment statistics from ONS cover the three-month period up to the end of April 2017, and on the face of it reflect a continuation of the story of the last few years.

"Put simply, the employment numbers are very strong, with a record high employment rate (74.8%), the unemployment rate (4.6%) the joint lowest since 1975, and total labour hours worked continuing to grow. Self-employment continues its remarkable upward trajectory (with 4.8 million people reporting that they are working for themselves, a growing number on a part-time basis). Hiring activity, at least as reflected in the number of unfilled vacancies, also remains at historically high levels, close to 800,000.

"However, several prices are being paid for this continuing success on the numbers in work. There is a further tightening of the ferocious squeeze on workers’ living standards, with a fall in real earnings as inflation picks up. It is difficult to believe that the lid can be kept on wages indefinitely and that the pressure building up here will not find an outlet soon (arguably a political outlet has already been seen in last week’s election results). Also, the UK’s dire labour productivity performance continues, as the employment growth figures are accompanied by the recent slackening of GDP growth.

'It is worth re-emphasising that while the economy has been resilient so far in the face of the unknown shape of the Brexit outcome, and has been bolstered in the short-term by the fall in Sterling, the picture could change very quickly as clarity emerges regarding the migration rules, trading and tariff arrangements associated with Brexit.

"It is probably too early to interpret the worsening of the single month employment figures in the ONS release as early signs of a downturn. The single month figures do not meet the criteria for official statistics, and they could well have been affected by one-off effects such as the Easter break. Their significance will, however, become clear in the months ahead."

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