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Employment rate up to 74.9%, ONS reveals

Estimates from the Labour Force Survey show that, between December 2016 to February 2017 and March to May 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 32.01m people in work, 175,000 more than for December 2016 to February 2017 and 324,000 more than for a year earlier.

The employment rate (the proportion of people aged from 16 to 64 who were in work) was 74.9%, the highest since comparable records began in 1971.

There were 1.49m unemployed people (people not in work but seeking and available to work), 64,000 fewer than for December 2016 to February 2017 and 152,000 fewer than for a year earlier.

The unemployment rate (the proportion of those in work plus those unemployed, that were unemployed) was 4.5%, down from 4.9% for a year earlier and the lowest since 1975.

There were 8.83m people aged from 16 to 64 who were economically inactive (not working and not seeking or available to work), 57,000 fewer than for December 2016 to February 2017 and 55,000 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 21.7% 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 1.8% including bonuses, and by 2.0% 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 0.7% including bonuses, and fell by 0.5% excluding bonuses, compared with a year earlier.

Phil Sheriden, senior managing director at Robert Half, said, “While employment levels remain high, organisations cannot afford to become complacent with their retention efforts.

“High employment often brings challenges for retention and hiring as the availability of skilled talent continues to shrink, further fueling the war for talent. Our research shows that 81 per cent of human resources directors have concerns about losing a top performer, as the competition for talent intensifies.

“As we head into the summer month, maintaining productivity and success hinges on hiring and retaining the right talent -- and keeping them motivated. With rising workloads, a growing talent shortage and workplace digitisation, today’s workforce is ripe for disruption.

“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, any business is the sum of its parts. Without consistently prioritising employee wellbeing and happiness, organsiations will lose out in the current labour market.”

totaljobs’ HR director, David Clift, commented, “Today’s fall in the unemployment rate shows us just how strong the UK job market is at the moment. The figures are particularly impressive given that the ONS data covers March-May, a time when General Election campaigning and the sense of instability it caused was nearing its peak.

“These figures also build on last month’s, where the UK’s unemployment rate was at its lowest in over 40 years.

“Looking forward, the labour market figures may not remain quite as positive, as we begin to see post-election uncertainty hit the job market. But with a government now in place with a greater focus on the labour market, perhaps this uncertainty can be nipped in the bud. There is a renewed opportunity to push on with policies that nurture working conditions and create environments that attract and retain the best talent.”

Mariano Mamertino, EMEA economist at Indeed, stated, “Britain’s steadily improving employment picture is starting to look more anomaly than achievement.

“With 32 million people in work and the employment rate at its highest level since records began, the progress made since the recession is nothing short of remarkable.

“But the UK’s seemingly boundless capacity to create new jobs can only defy economic gravity for so long.

“In recent months the employment data has begun to slip out of sync with the wider economy. GDP grew by just 0.2% in the first quarter, and with both business confidence and consumer spending waning, future job growth may increasingly need to come from workers entering self-employment.

“In some ways the labour market has become a victim of its own success. Separate ONS data reveals the number of unemployed people per job opening has declined to its lowest level in 15 years - meaning employers frequently have to fight harder to recruit the people they need.

“As echoed by yesterday’s Taylor review, one of the chief drivers of that success has been the large number of workers opting to strike out on their own.

“Between 2008 and 2016, more people became self-employed in Britain than in any other EU15 country. But the rise of self-employment can only spur job growth so far, as 63% of UK workers are still full-time employees.

“While the disconnect between the rosy employment figures and the darkening economic picture is little cause for concern, the gulf between wage growth and price inflation cannot be ignored.

“With consumer prices rising at 2.9% a year and real wages - including bonuses - shrinking by 0.7%, the wage squeeze being endured by millions of Britons has turned into a clear and present danger for the economy.”

Ian Brinkley, acting chief economist at the CIPD, said, “These figures show a stark contrast in the labour market between some impressive employment growth figures, dominated by a rise in full time permanent employment, and continued weakness in wages. Although there is a slight improvement in average earnings growth in money terms, pay is still lagging behind prices and as a consequence real wages are still falling. 

“There is little prospect of a sustained recovery in pay over the next year, especially given the very poor productivity figures released earlier this month.  The Bank should therefore give more weight to the prospects for pay and productivity than to the rise in employment, and hold off a further interest rate rise.

“The fall in real wages affecting most people in the labour market is a reminder that the challenges around improving the quality of working lives for most people is much bigger than tackling the gig economy alone, and highlights the need for Government to work with employers and unions to tackle the underlying causes of low paid, low quality work.”

Lee Biggins, founder and managing director of CV-Library, commented, “It’s positive to see that the unemployment rate is continuing to drop, and it’s clear that businesses across the UK are working hard to strengthen their workforce and keep more people in work. In fact, our own job market data for the second quarter of 2017 has found that advertised job vacancies were up by 1.6% on the first quarter of the year, and 14.9% when comparing data from the same period last year.

“Not only this, but the ONS figures indicate that weekly earnings for employees have increased and we also found that salaries rose by an extremely promising 1.9% in Q2 2017, when compared with Q2 2016. Given the events that took place last summer following the EU Referendum, and the fact that the Brexit backlash was yet to hit, it’s extremely positive to witness this jump in pay and suggests that businesses across the UK are remaining confident and still looking to invest in their workforce.”

Recruitment & Employment Confederation director of policy, Tom Hadley, stated, “The jobs market has continued on a positive trend, with the employment rate reaching another record high. This is driven by strong demand for staff as businesses look to expand.

“With the unemployment rate at its lowest since 1975, there is no relief for employers struggling to fill vacancies. We rely on people from abroad and need an immigration system based on this reality. At the same time, employers are reaching out to encourage applicants from underrepresented groups and are reviewing hiring practices. The Matthew Taylor report, published yesterday, encourages businesses to drive good employment practices, which is increasingly important as a way of attracting and retaining staff.

“Whilst it’s encouraging to see that wage growth excluding bonuses has increased on last month’s data, pay still isn’t keeping up with inflation. Real wages have been in decline for three months in a row. In contrast, our data shows that employers are increasing starting salaries in a bid to attract candidates, so it makes sense for anyone wanting a pay rise to move jobs. Right now people with the right skills can take their pick of jobs as the number of vacancies keeps growing.”

Kathleen Brooks, research director at, said, "This morning’s labour market data was a solid report for May/ June, the unemployment rate fell to 4.5%, which is considered the natural rate for UK unemployment, while the economy created 175k jobs in the three months to May, the highest level since last summer. Wage data was also a touch stronger than expected, with ex-bonus weekly earnings touching 2%, expectations were for a rise to 1.9%. The question now is, does this signal a stronger period for wage growth in the UK, something that has been a long time coming?

"Even with the pick-up in wage growth in May, the consumer remains constrained, as CPI is running at 2.9%, however, things could start to get easier for UK households as we will explain. Chart 1 below shows UK 3-month jobs growth and UK ex. Bonus wage data over five years. As you can see, there is no real link between UK job creation and wage data, with the two often moving in opposite directions. However, the recent uptick in wages has corresponded with an uptick in job creation, after the two moved in opposing directions, as you can see marked in the chart. Wages tend to lag job growth, however, as job growth continues to pick up from the lows reached in Q3 last year, perhaps now is the time for wages to rise. Coupled with the recommendations from the Taylor report on the UK labour market and a move towards giving pay rises and benefits to those employed in the “gig economy”, this could be the long-awaited start of upward pressure on wage growth. One month’s worth of data does not make a trend, but we will be watching this development closely to see if our hypothesis is correct."

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