UK Unemployment Falls to 43 Year Low
According to figures released by the Office for National Statistics (ONS), UK unemployment levels are at their lowest for over 40 years, with a net 65,000 jobs being created in the three months running April-June.
The overall number of unemployed people in the country now stands at 1.36 million, or exactly 4% of the potential workforce. The overall trend is for more jobs to be created or left vacant, with the pool of potential workers shrinking. Despite the positive signs, the number of jobs created was lower than the figure predicted by industry experts.
Another boost to the economy was the continuing shift from zero-hours contracts to full-time guaranteed employment, with 104,000 workers making the transition. This means that less than 800,000 people are on zero-hours contracts as their primary source of income. Over 62,000 zero-hours jobs have been lost in the health and social work sector, either through conversion into standard permanent contract positions, or via staff leaving for more secure jobs elsewhere.
The ONS also reported on wage growth, finding that the average pay packet (without bonuses) grew by 2.7% over the last three months. The amount of work for pay rose as well, with productivity – output per hour – up by 1.5%, the greatest rise since 2016. One negative, however, is that wage growth continues to lag behind a common marker of required consumer spending – rail fares – which have risen by 3.4% in the same period.
The ONS found that the number of EU nationals working in the UK continues to drop as part of an overall trend since the Brexit vote in the summer of 2016, with the largest overall drop in a quarter since the vote – largely due to the lack of assurance from the government about their rights post-Brexit. However, the number of non-EU nationals has continued to rise, with the figure now standing at 1.27 million, over 70,000 more than this time last year. Matt Hughes, senior ONS statistician, said: “The growth in employment is still being driven by UK nationals, with a noticeable drop over the past year in the number of workers from the so-called A8 European countries in particular.”
Suren Thiru, head of economics at the British Chambers of Commerce, said: “Achieving sustained increases in wage growth remains a key challenge with sluggish productivity, underemployment and the myriad of high upfront business costs weighing down on pay settlements. As such, there remains precious little sign that wage growth is set to take off – undermining a key assumption behind the Monetary Policy Committee’s recent decision to raise rates.”
The Bank of England has recently raised interest rates for only the second time in 10 years in a bid to manage inflation as the economy continues to gather strength. Despite the Bank’s prediction that upward pressures from earning rises would require rise in the cost of borrowing, the ONS’ figures show that average earnings have actually fallen behind off, raising questions over the decision.