UK employment at record high as wages pick up
Jobs market within the UK continues to tighten as employment continues to surpass its all time high. The news comes as EU talent increases its flow both towards and away from the UK.
16 August 2017
Employment in the UK hit another all-time high in the second quarter of the year amid a pick-up in pay growth, latest official figures have shown.
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James Smith, an economist at ING Bank, added, “Wednesday’s jobs report was slightly healthier than might have been expected. The big question for the Bank of England is whether the ever-tighter jobs market starts to translate into a sharp acceleration in wage growth.“We have seen slightly more momentum in the level of average weekly earnings recently following a particularly sluggish start to the year. That appears to corroborate the BoE’s view that some of the recent weakness in pay growth is attributable to temporary factors like the apprenticeship levy and pension costs.“However, even as the probability of a Brexit transition period increases, there’s still plenty of political uncertainty facing businesses. Throw in rising import costs, which will keep pressure on firm’s cost bases, and slowing economic growth and consumer demand, then it looks unlikely that wage growth will pick up rapidly over coming months. Or at least, not enough to meet the Bank’s three per cent target for 2018.“In fact, we expect wage growth to hover around the two per cent level for the rest of this year. With inflation likely to inch closer to three per cent.” Lee Biggins, managing director of CV-Library, commented, “It’s extremely positive to see that employment rates are continuing to rise, and this is reflected in our own job market data from the second quarter of 2017. Our data found that not only did jobs increase by 1.6 per cent on Q1 2017 but they jumped by a staggering 14.9 per cent when comparing data with the same period last year.“Furthermore, we found that organisations in some of the UK’s key industries are remaining confident and continuing to invest in their workforce. Our data indicates that the manufacturing, charity, automotive and social care sectors all saw an impressive increase in job vacancies last quarter. This is particularly good given that some of these sectors were predicted to be hit hardest by Brexit.”
Read David Sapsted's article on Establishing Right to Remain – which discusses the uncertainty over immigration which the UK faces following Brexit – in the Summer 2017 issue of Relocate Magazine.
For related news and features, visit our Brexit section.
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Wage growth still behind inflation rate
Data from the Office for National Statistics (ONS) showed the number in work increased by 125,000 to 32.07 million in Q2, representing an employment rate at a record 75.1 per cent. Meanwhile, unemployment fell by 57,000 to 1,484,000 over the three months, representing a jobless rate of 4.4 per cent – a 42-year low.On wages, the ONS said annual growth stood at 2.1 per cent, still below the 2.6 per cent inflation rate but up on the previous quarterly figure of 1.9 per cent.Employment Minister Damian Hinds said, “These statistics show that record levels of people are in work across the country and earning a wage, which is great news.“Over the past year the rise in employment has been overwhelmingly driven by permanent and full-time jobs, as employers continue to invest in Britain’s strong economy.“The task now is to build on this success through Jobcentre Plus and our employment programmes so that everybody can benefit from the opportunities being created.”Prof Geraint Johnes, director of research at the Work Foundation, commented, “Overall, the evidence suggests that, despite the low headline rate of unemployment, there remains a lot of slack in the labour market.“With employment continuing to rise while rates of immigration fall, this slack is likely to diminish over the coming months. But, with pay settlements now well below the rate of price inflation, there is no evidence to suggest that this is turning into sustained wage pressure.”Related stories:
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James Smith, an economist at ING Bank, added, “Wednesday’s jobs report was slightly healthier than might have been expected. The big question for the Bank of England is whether the ever-tighter jobs market starts to translate into a sharp acceleration in wage growth.“We have seen slightly more momentum in the level of average weekly earnings recently following a particularly sluggish start to the year. That appears to corroborate the BoE’s view that some of the recent weakness in pay growth is attributable to temporary factors like the apprenticeship levy and pension costs.“However, even as the probability of a Brexit transition period increases, there’s still plenty of political uncertainty facing businesses. Throw in rising import costs, which will keep pressure on firm’s cost bases, and slowing economic growth and consumer demand, then it looks unlikely that wage growth will pick up rapidly over coming months. Or at least, not enough to meet the Bank’s three per cent target for 2018.“In fact, we expect wage growth to hover around the two per cent level for the rest of this year. With inflation likely to inch closer to three per cent.” Lee Biggins, managing director of CV-Library, commented, “It’s extremely positive to see that employment rates are continuing to rise, and this is reflected in our own job market data from the second quarter of 2017. Our data found that not only did jobs increase by 1.6 per cent on Q1 2017 but they jumped by a staggering 14.9 per cent when comparing data with the same period last year.“Furthermore, we found that organisations in some of the UK’s key industries are remaining confident and continuing to invest in their workforce. Our data indicates that the manufacturing, charity, automotive and social care sectors all saw an impressive increase in job vacancies last quarter. This is particularly good given that some of these sectors were predicted to be hit hardest by Brexit.”
EU jobs-seekers flowing in and out of UK
The ONS data followed publication of Morgan McKinley’s latest London Employment Monitor which showed two-way traffic among EU workers in the capital’s financial sector.While the number of EU job-seekers rose in July, apparently in the hope of securing UK residency ahead of Brexit, the sector was also “haemorrhaging talent” as others moved abroad because of the referendum result and the imminent relocation of some banking positions from London.Recording a 12 per cent month-on-month rise in professionals seeking jobs in July, Hakan Enver, Morgan McKinley’s operations director for financial services, said, “EU nationals who want to stay in Britain have a shrinking window of opportunity to get a job and permanent residency, and many are seizing it.”While the survey recorded a month-on-month increase in vacancies in July – normally, the start of the summer slowdown in recruitment – the report also found an 11 per cent drop in vacancies over the past year and a 33 per cent fall in job seekers, showing the sector was “still haemorrhaging talent” because of Brexit, Mr Enver added.Meanwhile, a report from the think-tank, the Resolution Foundation, found a growing reluctance among British workers to relocate within the UK, mainly as a result of a confidence in job stability since the financial crisis.An analysis found moving regions to a new job had fallen to its lowest level since 2010 with the numbers relocating within the UK now 25 per cent lower than it was at the turn of the century.Stephen Clarke, policy analyst at the Resolution Foundation, said, “Job mobility matters not just for the individual getting the pay rise but to our economy as a whole.“On a basic level that’s about avoiding labour shortages, but more importantly in an economy nearing full employment, ensuring the talent and potential of individuals and firms doesn’t go to waste is essential to boosting productivity.”Read David Sapsted's article on Establishing Right to Remain – which discusses the uncertainty over immigration which the UK faces following Brexit – in the Summer 2017 issue of Relocate Magazine.
For related news and features, visit our Brexit section.
Access hundreds of global services and suppliers in our Online Directory
Get access to our free Global Mobility Toolkit
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