Unemployment tumbles but so does total of EU workers

Unemployment in the UK in the second quarter of the year was at its lowest since 1976 as the number of EU27 workers in the country saw a record fall, according to official figures released on Tuesday.

Image of people illustrating article about Brexit related employment figures in the UK
The Office for National Statistics (ONS) put the number of EU nationals working in the UK in Q2 at 2.28 million - a fall of 86,000 on a year earlier and the largest annual decrease since records began 20 years ago.Publication of the figures came just 24 hours after a survey of 2,000 firms by the Chartered Institute of Personnel and Development (CIPD) and the Adecco Group, found that employers were suffering a "supply shock" in the skills they needed because of an abrupt fall in the number of EU nationals coming to the country because of Brexit.ONS statistician Matt Hughes commented: "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 eastern European countries in particular."The ONS said the number of people in work in the country increased by 42,000 to 32.39 million, representing a 75 per cent employment rate, while vacancies increased by 20,000 to 829,000, the highest on record.

UK jobs market remains "in good shape", despite economic conditions

Meanwhile, the unemployment rate in Q2 stood at just four per cent with the jobless total decreasing by 65,000 to 1.36 million. Disappointingly, however, average earnings increased by 2.4 per cent in the year to June, down from the annual rate of 2.5 per cent the previous month.Suren Thiru, head of economics at the British Chambers of Commerce, said: “The continued rise in employment and the drop in the unemployment rate is further confirmation that the UK’s jobs market remains in good shape, despite subdued economic conditions.“With earnings growth continuing to slow, the pace at which pay is exceeding price growth remains negligible, and is therefore unlikely to provide much respite to the financially squeezed consumer."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 (Bank of England's) Monetary Policy Committee’s recent decision to raise rates.“More must be done to support firms looking to recruit and retain staff, including easing the up-front costs on business and addressing the chronic skills shortage.”

Flagging immigration numbers making it difficult for firms to recruit staff

Tej Parikh, senior economist at the Institute of Directors, added: "The enduring desire for businesses to hire and create new positions is without doubt a sign of strength in the face of unprecedented economic uncertainty."Yet with the pool of available workers shrinking at a rapid speed, particularly given flagging immigration numbers, firms are finding it harder to recruit the staff they need."Under any normal circumstances this would mean pay packets should rise markedly as corporates compete for workers, but we shouldn't hold our breath."Many businesses are still struggling to find the margins to notably boost salaries given sky-high business rates, the rise in national living wage, and subdued productivity growth."
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