UK boosted by record employment and wages surge

Brexit concerns appear to be having little effect on the UK jobs market with official data showing a record high number of people in work and wages growing at their fastest rate in 11 years.

City workers walk past Lloyds of London
The Office for National Statistics (ONS) revealed on Tuesday that the employment rate stood at 76.1% - the joint highest since comparative records began in 1971 - while the 32.81 million people in work was the highest ever.According to the figures, the number of workers with non-UK nationality increased by 133,000 on the year to 3.66 million.In June, there were 425,000 more people in work than a year earlier, mainly because of the creation of more fulltime jobs. The employment rate for women hit a record 72.1% while, for men, it stood at 80.1%.Wage growth, excluding bonuses, increased to 3.9% in the year to June and stood at 3.7% including bonuses - both sizeable increases on the previous month.The number of vacancies stood at 820,000, down from 861,000 at the start of the year but still close to historic highs. Meanwhile, the unemployment rate in the second quarter edged up slightly to 3.9%.Ian Stewart, chief economist at Deloitte, commented: “The days of sharply falling unemployment are behind us, but a tight labour market points to further gains in wages and spending power. Despite a second quarter decline in (GDP) growth, the UK economy still has momentum.”The data on wages and employment came as a relief to ministers especially with Brexit looming and after recent figures showed an economic slowdown in Q2.

UK economy: Chancellor of the Exchequer Sajid Javid comments

Chancellor of the Exchequer Sajid Javid said: "I'm pleased to see 2.9 million more people are in work every day since 2010, wages are rising at their fastest in more than a decade, and people across the UK are taking home more of what they earn."Thanks to the hard work of the British people and the government, we can further invest in our public services."And today's figures are another sign that despite the challenges across the global economy, the fundamentals of the British economy are strong as we prepare to leave the EU."

UK economy: Work and Pensions Secretary Amber Rudd comments

Work and Pensions Secretary Amber Rudd added: “More people in work than ever before means more households across the UK are earning a regular income, and millions more receiving a pay boost thanks to wages rising at their fastest in a decade – outstripping inflation for a 17th month in a row.“Our workforce increasingly reflects our vibrant society, with a record number of women in employment while the number out of work falls to an all-time low.“This week many young people will receive their A Level results and begin their career journey. They should know that they are entering a workforce that is flourishing and full of opportunity and I hope all young people, especially women, feel empowered to flourish in every role in every sector.”

UK employment: job vacancies are dropping

However, Tej Parikh, chief economist at the Institute of Directors, expressed concern that the UK jobs market could be peaking, citing the decline in vacancies and the rise in unemployment."While competition has pushed up salaries, thin margins and low productivity may set a ceiling for pay growth. Although vacancies remain high by historic standards, the number has been dropping since the start of the year," he said.“Impressive jobs market data should not lull policymakers into a false sense of confidence. As it becomes harder to find talent, businesses will need better access to training courses and a flexible immigration system to meet their skill needs.”

UK average wages? Rising at the fastest level in a decade

Pawel Adrjan, UK economist at the global job site Indeed, commented: "This snapshot of the UK labour market is very much a tale of two halves. Unemployment has risen, but for those in work, pay packets are swelling nicely - average wages are rising at their fastest level for more than a decade.“The increase in unemployment is a case of economic gravity finally reasserting itself as Britain’s job creation boom slows. “The total number of vacancies continues to slide further from the peak it reached at the start of the year, suggesting more employers are holding off on hiring.“Our analysis shows that total vacancies rose in only two out of 12 employment sectors - education and health and social work - with all the others seeing a fall. “Yet for all that, the labour market is one of the few parts of the economy to have largely shrugged off the growth-sapping uncertainty that has stymied progress elsewhere."

CIPD: A significant proportion of migrants workers are filling skilled vacancies, especially in healthcare

Gerwyn Davies, senior labour market adviser at the Chartered Institute of Personnel and Development (CIPD), said, "The UK labour market continues to stand strong despite the current political and economic headwinds. Employer demand for workers remains robust, which is partly being met by a relatively sharp increase in the number of non-UK nationals in employment."A significant proportion of migrants workers are filling skilled vacancies, especially in healthcare, which may not otherwise be filled. Non-UK citizens are therefore playing an essential and complementary role to the demands of the UK labour market. It is key that the UK's future immigration system is flexible and responsive to the specific skills needs of the UK economy.“The tightening labour market, especially in sectors such as construction, is clearly putting pressure on firms to raise wages for staff. Looking ahead, organisations need to address their workforce pipeline challenges before migration restrictions hit them hard - improving pay on its own will not be enough.

For more news on the UK labour force and skilled workers, visit our United Kingdom section.

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