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Employment rate falls to 76%

The latest data shows that the UK employment rate was estimated at 76.0%, higher than a year earlier (75.6%); on the quarter, the rate was 0.1 percentage points lower, the first quarterly decrease since June to August 2018.

Estimates for March to May 2019 show 32.75 million people aged 16 years and over in employment, 354,000 more than for a year earlier. This annual increase of 354,000 was mainly due to more people working full-time (up 247,000 on the year to reach 24.09 million). Part-time working also showed an increase of 107,000 on the year to reach 8.66 million.

The UK unemployment rate was estimated at 3.8%; it has not been lower since October to December 1974.

For March to May 2019, an estimated 1.29 million people were unemployed, 116,000 fewer than a year earlier and 820,000 fewer than five years earlier.

The UK economic inactivity rate was estimated at 20.9%, lower than a year earlier (21.0%).

Estimates for March to May 2019 showed 8.62 million people aged from 16 to 64 years not in the labour force (economically inactive). 

Estimated annual growth in average weekly earnings for employees in Great Britain increased to 3.4% for total pay (including bonuses) and 3.6% for regular pay (excluding bonuses).

In real terms (after adjusting for inflation), total pay is estimated to have increased by 1.4% compared with a year earlier, and regular pay is estimated to have increased by 1.7%.

Alex Fleming, country head and president of staffing and solutions for the Adecco Group UK and Ireland, commented, “It’s encouraging that the continuing uncertainty around Brexit hasn’t negatively impacted employment levels, with the latest ONS employment data showing that demand for talent remains strong. These figures are encouraging for both jobseekers and the UK economy as a whole.  

"The challenge of a higher employment rate for businesses is that the pool of available talent is shrinking, which means organisations need to look at how they’re attracting the best talent in a highly competitive marketplace. To get ahead of any negative impact from Brexit, businesses must not only invest in recruitment, but in developing the skills of their existing workforce. A greater focus on re-/upskilling will not only enable businesses to create the exact skills they need, but future-proof their workforce in an age of rising automation and digital disruption.”

Pawel Adrjan, UK economist at Indeed, said, “After months of consistent growth, the employment rate has fallen for the first time since last year. Tiny though the slide is, it’s a hint that Britain’s booming jobs market could finally be colliding with the ceiling of full employment.

“It’s far too early to tell if this is a blip or a turning point. Other elements of the latest labour market snapshot remain resolutely rosy. The unemployment rate is firmly grounded at its historically low level and wage growth is slowly picking up again.Most encouraging of all are the signs that more people are re-entering the workforce. Small though it is, the fall in the number of economically inactive people is a reassuring indication that rising wages are tempting more people to get back into work.This is vital if employer demand for recruits is to avoid being choked off by a lack of supply.

“Meanwhile, at a micro level, Indeed’s own data suggests demand for care workers and some medical professionals is growing fastest. Online job postings for healthcare support roles jumped by almost a quarter (24%) between the second quarter of 2018 and the same period this year.At the other end of the scale, job postings for teachers fell by 13%, with vacancies also declining for transportation, business, architecture, engineering and design jobs."

Gerwyn Davies, senior labour market analyst for the CIPD, said, “The jobs boom is finally showing signs of petering out, which should come as no surprise given the current constraints on the number of available and suitable candidates and the modest fall in labour demand. It is also clear that the number of redundancies is edging up, which will have been affected by the strong headwinds facing the retail and automotive sectors. It’s likely that the political uncertainty over the past six months has affected the confidence levels of recruiters given that the start of the year marked the turning point for the softening in employment growth.

“Despite this, pay growth has received a further modest boost. Average weekly earnings for employees excluding bonuses in Great Britain were estimated to have increased by 3.6% over the past year, which will provide a further boost to the living standards of British workers. However, employers with low levels of productivity will face a hit to profits if they raise pay without seeking to improve productivity growth.   The solution to this problem partly lies in improving management practices."

Tom Hadley, director of policy and campaigns at the Recruitment & Employment Confederation, said, “Today’s ONS figures show a strong and robust labour market, with high employment and pay continuing to rise. The overall picture remains positive - an economy that provides opportunity to millions. This is good news, but it should not be taken for granted.

“The declining number of vacancies continues to act as a warning sign. Our own Report on Jobs data shows a slight decline in permanent placements, as employer confidence and investment decisions remain stunted by Brexit uncertainty. At the same time, the challenge in sectors as wide-ranging as technology, healthcare and hospitality continues to be finding candidates to meet demand from employers.

“As we are set to see big changes at the top of government, the new PM and his cabinet must ensure that protecting and enhancing the UK jobs market is at the top of the agenda. This includes an open immigration system for businesses to attract the talent they need and ensuring that more workers have access to skills training and progression opportunities.”

David Morel, CEO of Tiger Recruitment, added, "The unemployment rate has remained steady at 3.8%, demonstrating stability alongside a continued candidate-short market which is in line with our own experience in the last quarter. We’re seeing an increase in counter-offers; candidates are certainly being more selective about their job search; and they’re looking for tangible incentives to move from their current place of work. In the business support market, we’re seeing employers offer up to a 10% increase on candidates’ previous salaries. This increase is echoed by ONS’s reports of the fastest regular pay growth in nearly 11 years in cash terms.

"If businesses can’t afford to increase their salary budgets, there are a few other options they can choose from in order to compete for top talent. Either they become more creative with their flexible benefits packages for employees; alternatively, they will need to look at hiring strong candidates who have slightly less experience.

"A continued trend is the influence of females on high employment levels, due partly to changes to the State Pension age for women which means fewer women are retiring between the ages of 60 and 65. Interestingly, more women are also leaving part-time work for full-time employment, so companies looking to attract talent may benefit from introducing more family-friendly benefits packages.

There were 827,000 job vacancies in March to May 2019 - 9,000 fewer than a year earlier, and 19,000 fewer than in the three months to March 2019. This is demonstrative of a slow-down in growth, which can likely be attributed to the Brexit extension and continuing political uncertainty.

"Another point of interest was the record number of part-time self-employed individuals, which is at an all-time-high and double what it was 25 years ago – it will be interesting to see if this is impacted by the upcoming IR35 legislation coming into effect next year."

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