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UK labour market remains strong despite wage stagnation

October 26, 2017  /   No Comments

UK labour market remains strong despite wage stagnationDespite the latest figures from the Office for National Statistics (ONS) revealing that unemployment levels remain the lowest they have been since 1975, workers are still facing a squeeze from subdued pay.

That’s according to Ian Brinkley, Acting Chief Economist at the CIPD, the professional body for HR and people development.

He said: “The latest figures again show the subdued pay outlook across the economy, with a 2.2% increase continuing to lag behind inflation. With no end in sight to this squeeze on living standards, many workers will be facing a Christmas period where they will once again be required to tighten their belts. There is little to suggest that wages are responding to low unemployment and higher inflation.

“While the headline employment figure remains strong, there are some signs that the UK labour market may be slowing down in terms of job creation. The rise in employment is mostly down to part-time self-employment, which suggests much of the increase is around marginal work and an increase in temporary jobs. We will have to wait and see if this initial sign becomes a trend, but if it does the UK economy faces a potentially potent mix of falling pay and a stagnant labour market.”

This viewpoint was echoed by the Recruitment & Employment Confederation (REC), which said that the stagnation in real wages means that moving job the best way to secure a pay rise.

The REC’s chief executive Kevin Green: “The creation of more jobs despite business uncertainty is a testament to the determination and positive attitude of British employers to build and grow in the face of economic challenges. From a jobseeker’s point of view though, the continued squeeze on wages means there is little room for full-throttle celebration.

“Recruiters tell us that due to the diminishing pool of available candidates, employers are willing to offer higher salaries or hourly pay rates when advertising for new hires, meaning the best way to secure an above-inflation pay rise might well be to move jobs.”

Meanwhile, there are thoughts that the UK’s currently strong labour market owes much to the growth in the self-employed, particularly among women.

The new labour market figures show that 32.1 million people are now in work in the UK, a rise of 94,000 from May 2017. A large factor behind this is the growth in the number of self-employed people by 70,000, taking the UK total to a record 4.86 million. They now make up 15.1% of the UK workforce.

Tom Purvis, IPSE Economic Policy Adviser, commented: “These employment figures show the UK labour market is going from strength to strength – in no small part because of the growing number of people taking the leap into self-employment.

“Nor is it just the self-employed in general who are driving the UK’s high employment figures – it’s particularly self-employed women. In fact, out of the 94,000 more people in work – both employed and self-employed – 78,000 are women. Self-employment is giving more and more women the chance to work flexibly, which is especially welcome to recent mothers.

“Overall, these figures show just how important the self-employed have become to our labour market. The flexibility they provide will be absolutely essential to sustaining a successful economy after Brexit.”

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