British jobs market buoyant as wages rise

While the most recent UK employment figures remain high, some business and economic experts have expressed concerns. What worries them about the British labour market and its prospects for the future?

Woman illustrating a graph showing upward movement - photograph
The UK employment rate remained at a near-record high in the three months to May, while wages grew at the fastest rate since before the financial crisis, according to latest figures from the Office for National Statistics (ONS).Meanwhile, the unemployment rate of 3.8 per cent remained the lowest since the end of 1974, the ONS said.Annual growth in average weekly earnings for employees in Great Britain increased to 3.6 per cent for regular pay, excluding bonuses - an increase of 1.4 per cent on a year earlier after adjusting for inflation.Employment was up by 28,000 in the three months to May to 32.75 million, while unemployment fell by 51,000 to 1.29 million. Meanwhile, the number of self-employed part-timers hit a new high of 1.52 million.

ONS: UK unemployment down and employment at a record high

Matt Hughes, deputy head of labour market statistics at the ONS, said: "The labour market continues to be strong, with the employment rate still at a near-record high and unemployment down again."The number of self-employed part-timers has passed one and a half million for the first time, well over double what it was 25 years ago."Regular pay is growing at its fastest for nearly 11 years in cash terms, and its quickest for over three years after taking account of inflation."Employment Minister Alok Sharma said: "Wages outpacing inflation for 16 months in a row, more people in work than ever before and joint-record female employment means better prospects for many thousands of UK families and shows the continued resilience of the UK labour market."With unemployment still falling, remaining at its lowest level since 1974, it's clear that UK employers continue to have confidence in our hard-working workforce."

IoD: UK businesses are facing skills shortages

While welcoming the figures, Tej Parikh, chief economist at the Institute of Directors, expressed concern that businesses across many sectors were facing skills shortages.“The labour market continues to be the UK economy’s strong suit, amid ongoing uncertainty," he said. “High employment has provided uplift to household incomes, which has supported the economy in a particularly challenging period."However, the booming jobs market has inevitably shown signs of losing momentum in recent months. As more and more people have entered work, businesses have found it harder to fill vacancies, and skills shortages are now clearly evident across all sectors."

CBI: the UK labour market remains tight and productivity remains in the doldrums

Alpesh Paleja, principal economist at the Confederation of British Industry, added: "Despite signs that employment growth is tailing off, the labour market remains tight, with the unemployment rate at a multi-decade low."It's encouraging that pay growth has picked up further, putting more money in people's pockets, but as recent data shows productivity remains in the doldrums."

Deloitte: how long can UK jobs market defy economic gravity?

Ian Stewart, chief economist at Deloitte, commented: "The jobs market seems to have defied gravity, with wages rising and unemployment falling even as growth has slowed."The big question is how long can that last. With job vacancies edging lower and firms more cautious on hiring, the pace of job creation could slow from here."

The danger to the UK economy, and workers: part-time, self-employed workers driving the latest UK employment figures

Geraint Johnes, professor of economics at Lancaster University Management School, said the figures highlighted a large rise in the number of part-time, self-employed workers."Following the pattern of recent months, the labour market statistics exhibit a shift towards less secure forms of employment," he said."While the overall employment level continued to rise in the three months to May of this year, the composition of this increase is a source of some concern. The number of full-time employees fell by some 77000, and the number of part-time employees also fell slightly. There was a modest increase in the number of full-time self-employed workers, but the main source of employment growth has been part-time self-employment."This grew by a massive 104,000 over the quarter. While many jobs of this kind offer workers the flexibility that they might want, this may come at a cost in terms of insecurity. As parts of the traditional engine room struggle in the current economic climate, workers may increasingly be turning to the gig economy."Subscribe to Relocate Extra, our monthly newsletter, to get all the latest international assignments and global mobility news.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 Directory