Record drop in number of EU workers in the UK

The UK records the largest annual decrease in EU27 workers. Also, UK unemployment levels are at a historic low, though unlikely to fall much further given a slowdown in job creation.

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The number of EU27 citizens working in the UK has recorded its biggest fall despite the total number of people employed in the country hitting an all-time high, official figures showed on Tuesday.

EU27 worker numbers in the UK have dropped

Recording a fall for three quarters in a row, the EU27 workforce currently stands at 2.25 million, down from 2.4 million a year ago and the largest annual decrease since records began more than 20 years ago.However, the reduction in the number of European workers was partially offset by an increase in non-EU nationals employed in the UK, with the total increasing by 34,000 to 1.24 million.

A8 Eastern European workers in the UK also in decline

"The recent uptick in British nationals in work and the decline in workers from the so-called A8 Eastern European countries both seem to be accelerating," said Matt Hughes, senior statistician at the Office for National Statistics.Although unemployment rose by 21,000 to 1.38 million in Q3, the number in work increased by 23,000 to a record high of 32.4 million. And vacancies now stand at a record 845,000, according to the ONS.

UK unemployment remains low, but is unlikely to fall

Mike Jakeman, senior economist at PwC, commented: “This data suggests that the labour market is now pretty tight. Unemployment remains very low in historic terms, but is unlikely to fall much further, given the slowdown in job creation."The result of this is likely to be further upward pressure on wages as companies struggle for find workers to fill vacancies. We are likely to hear much more about worker shortages in the coming year.”Although 132,000 new jobs were created over the year from June 2017, the ONS figures showed the number working in wholesaling, retailing and motor vehicle repairs fell by 73,000, the largest fall since June 2010.

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The ONS said that average earnings increased by three per cent in the year to September, up from the 2.8 per cent annual rate the previous month.Mr Hughes said: "The labour market is little changed on the previous three months, though still stronger than it was at this time last year."With faster wage growth and more subdued inflation, real earnings have picked up noticeably in the last few months. However, real wage growth is below the level seen in 2015, and real wages have not yet returned to their 2008 levels."

Institute of Directors senior economist, Tej Parikh, comments on the UK labour market

Tej Parikh, senior economist at the Institute of Directors, said: “The labour market is a source of strength against the backdrop of a testy economic environment, but there is a big question mark over how long this can last.“With pay packets finally picking up, households and retailers will have something to cheer about as we reach the festive period. Meanwhile, businesses are continuing to show resilience by opening up positions and pushing for new hires.“However, we’re unlikely to be entering a ‘new dawn’ for persistent wage growth just yet, as firms are facing ongoing struggles investing in their productivity. Business leaders are also finding it more and more difficult to fill openings as the pool of available talent shrinks.“So, while today’s data may be a boon as Brexit negotiations enter the zero hour, it shouldn’t mask longer term challenges in driving sustained growth in salaries and alleviating skills shortages.”Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Global Mobility Toolkit download factsheets resource centreAccess hundreds of global services and suppliers in our Online DirectoryClick to get to the Relocate Global Online DirectorySubscribe to Relocate Extra, our monthly newsletter, to get all of the international assignments and global mobility news.

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