UK jobs market stalls ahead of election

With a General Election set for 12 December, the UK jobs markets has slowed in Q3, according to new data.

UK jobs market stalls ahead of election
The UK jobs market cooled in the third quarter of the year amid continuing Brexit uncertainty and the prospect of December's general election, official figures showed last week.The employment rate of 71% remained close to a record, the number in work declined by 58,000 to 32.75 million in Q3 – a smaller fall than analysts had been predicting – while the number registered as unemployed also fell, by 23,000 to 1.31 million.A major reason for the decline in the number in work was believed to be the result of job losses in retail chains that had gone into liquidation. Additionally, the fall in both employment and unemployment was driven by a rise in the number of people deemed to have become economically inactive.

Total pay growth continues to outpace inflation

Data from the Office for National Statistics (ONS) also showed total pay growth had continued to outpace inflation, even though the rate of increase dipped to 3.6%, compared to the 3.8% reported last month.An ONS spokesman says, "The employment rate is higher than a year ago, though broadly unchanged in recent months. Vacancies have seen their biggest annual fall since late 2009, but remain high by historical standards."The number of EU nationals in work was very little changed on the year, with almost all the growth in overseas workers coming from non-EU nationals."
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Tej Parikh, chief economist at the Institute of Directors (IoD), attributes the employment and vacancies slowdown to the fact some firms were putting projects on hold because of the election and Brexit, while others were struggling to find qualified staff.“With so many in work, there has been a lift to household incomes, which has supported the economy through a challenging period," he says. "However, businesses are now finding it harder to access the talent needed to fill openings, so jobs growth is expected to slow further."Many firms are also putting recruitment plans on ice as wider projects and investments are bottled up by uncertainty. Vacancies are likely to continue falling.“The pick-up in wage growth earlier this year has been a plus, but there is clearly a limit to how high pay packets can go. With many firms facing elevated costs and difficulties raising their productivity game, the margins to raise pay are eroding. A further acceleration in wages now looks unlikely."The number of vacancies declined for the ninth consecutive month, with the total advertised positions falling by 18,000 to 800,000.

Salaries for UK financial services workers on the rise

Coinciding with the ONS figures was the publication of an analysis by recruitment software provider Broadbean showing that, despite a fall in the number of vacancies, salaries for UK financial services workers jumped amid competition for talent.The average salary for financial services employees stood at £48,500 in the first quarter before climbing to £53,000 in the Q2.Broadbean also found that, while the number of advertised vacancies in the sector had fallen during the year, so had the number of applications per vacancy for banking and finance jobs.“Potential applicants might be put off from applying for a job that might soon be moved abroad, or made redundant altogether,” Broadbean says. “But London will still remain a financial hub and The City still needs to attract talent. One method to attract talent is to increase the salaries for new vacancies."

Read more news and views from David Sapstead

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