Employment rate rises to 75.4%
Estimates from the Labour Force Survey show that, between September to November 2017 and December 2017 to February 2018, the number of people in work increased, the number of unemployed people decreased and the number of people aged from 16 to 64 years not working and not seeking or available to work (economically inactive) was little changed.
There were 32.26m people in work, 55,000 more than for September to November 2017 and 427,000 more than for a year earlier.
The employment rate (the proportion of people aged from 16 to 64 years who were in work) was 75.4%, higher than for a year earlier (74.6%) and the highest since comparable records began in 1971.
There were 1.42m unemployed people (people not in work but seeking and available to work), 16,000 fewer than for September to November 2017 and 136,000 fewer than for a year earlier.
The unemployment rate (the proportion of those in work plus those unemployed, that were unemployed) was 4.2%, down from 4.7% for a year earlier and the lowest since 1975.
There were 8.73m people aged from 16 to 64 years who were economically inactive (not working and not seeking or available to work), little changed compared with September to November 2017 but 154,000 fewer than for a year earlier.
The inactivity rate (the proportion of people aged from 16 to 64 years who were economically inactive) was 21.2%, lower than for a year earlier (21.6%) 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 2.8%, both excluding and including 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) increased by 0.2% excluding bonuses, and by 0.1% including bonuses, compared with a year earlier.
Recruitment & Employment Confederation (REC) director of policy, Tom Hadley, stated, “After a year-long wait, it’s a relief to see pay growth at its highest since summer 2015 and inflation coming down. Our data shows employers have been increasing starting salaries to compete for talent for years but it hasn’t been translating into pay rises for the wider workforce. Today’s data is a sign that employers are beginning to think seriously about how to keep existing staff, who could otherwise be lured away by companies with better pay offers.
“Businesses are still worried about filling vacancies. The low inactivity and unemployment rates mean employers have to attract candidates away from competitors. We already know employers are working hard to reach out to underrepresented groups and to make hiring practices as inclusive as possible, but they still can’t find enough candidates. That’s why it’s essential the government allows businesses to continue to recruit EU workers post-Brexit, without extra cost, time and bureaucracy. We simply don’t have the number of people in this country to fill vacancies, and if the government doesn’t recognise this it will hinder further growth of our economy.”
Tara Sinclair, economist and senior fellow at Indeed, commented, “Oil tankers turn faster, but the average Briton’s paypacket has finally changed direction.
“Almost a year after wages began falling in real terms, people’s pay rises are finally outpacing inflation again.
“With them the narrative of the UK’s labour market is shifting too. After years of relentless job creation, the employment rate is at the highest level on record - and the UK economy’s ability to keep generating new jobs is waning. As we approach full inflation, average wages are slowly being driven upwards.
“While employer demand remains strong, in some sectors there aren’t enough jobseekers to go around; and this tightness in the labour market is forcing up wages as employers compete with each other for the best talent.
“At the same time, paypackets are going further thanks to the strengthening Pound, which is making imports cheaper and taking the sting out of inflation.
“While no-one should confuse this small improvement in real wages with a sudden rebound in the UK’s economic fortunes, it’s still a welcome development. At the same time, improvements in Britain’s productivity levels could help consolidate these gains further.
“Modest though it is, this is an important first step on the road to stronger wages and a properly functioning labour market.”
Lee Biggins, founder and managing director of CV-Library, said, “The latest ONS figures show that employment is on the rise and earnings have finally begun to outpace inflation. This reflects the findings from our Q1 job market report, which revealed that salaries saw an increase of 1% last quarter, when compared with Q4 2017. This suggests that business across the UK are working hard to attract talented candidates to their vacancies.
“What’s more, some of the nation’s key industries saw candidate registrations rising at the end of Q1, with retail (52.7%) social care (37.2%), education (11.6%) and engineering (9.3%) leading the way. This data indicates that there is a strong pipeline of talent out there ready to make their next career move, yet many are nervous about doing so. In fact, applications dropped by 7.4% year-on-year and many are choosing to stick with their existing employer, hence why employment rates are so high.”
Paul Mizen, managing director of the Recruit Venture Group, “All that I’m hearing from the agencies that we support is that they are busier than ever. Some businesses are absolutely desperate to fill positions, and that is of course filtering to agencies, many of whom are now actively seeking new staff of their own to cope with demand. That is a nice problem to have and the uptick in wage growth is something many of us in the industry have waited for, for a long time.
“That means employers are getting bolder and aiming to be more competitive with their rivals to secure the skills they need. Similarly, employees themselves are fed up with sitting on wages that are either flatlining or barely keeping up with inflation. Now that wages appear to be growing – and the evidence we have seen certainly bears that out – I would expect the jobs market to continue to get hotter.
“Low interest rates and low inflation have been mirrored in wages, but now I think things are starting to seriously turn. The noises I’m hearing from the agencies we support is that the rest of 2018 could be very positive indeed.
“Productivity has long been touted as a key problem for the UK economy, but we have to accept the issue is likely to be around for a long while yet. What recruiters must do is recognise the issue, particularly given the Brexit transition period from March 2019. Net migration may well fall significantly further if the Government doesn’t put in place plans to allow workers with the right skills access to the UK jobs market. That could mean even more posts unfilled.”
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