Labour Market Statistics, May 2019: Beneath the headlines, more worrying signals on pay, employment and inequalities
14 May 2019
Tony Wilson, Director of the Institute for Employment Studies (IES), comments on the May 2019 release of ONS labour market statistics.
On the face of it, today’s jobs figures look like more of the same – the employment rate is holding steady at a record 76.1%, year-on-year earnings growth above 3%, and unemployment falling yet again, to just 3.8%. But digging a bit deeper, today’s figures add more weight to our fears in recent months that the labour market may be cooling – with Brexit uncertainty and a weaker global outlook beginning to take their toll.
Most significantly, the more detailed data on average weekly earnings (including bonuses) show that pay has been flat for six months now and in recent months has dipped below £530 per week. Real pay (i.e. after taking out inflation) has actually been falling slightly since the start of the year and is back to where it was last summer. Far from the decade-long pay squeeze being over, there are signs that it may be starting again – and with the ongoing freeze in Universal Credit, many low and middle income households will be feeling worse off this year than last.
In the employment data too, the month-on-month changes also give some causes for concern. While we need to be very careful in reading too much into monthly data – they are often subject to revision and are sensitive to changes in the survey sample – the headline figures show that the very recent fall in unemployment is explained not by more people working but by more withdrawing from the labour market entirely. This ‘economic inactivity’ has risen by 53 thousand (excluding students), driven in particular by more people reporting that they are have a long-term health condition or are looking after their family or home. Month-on-month, employment has actually fallen slightly (by 24 thousand).
Today also sees the quarterly release of figures on employment of disabled people and ethnic minority groups. In our comment on these three months ago we raised concerns about progress in addressing the significant inequalities that these groups face, and sadly today’s figures further bear these concerns out.
For the second quarter in row, ethnic minority employment has actually fallen (by 22 thousand) while employment of white people has risen (by 8 thousand) – with the ‘gap’ in employment rates increasing to 11.2% (from 11.1%). The year-on-year figures are far better, reflecting significant gains in the first half of 2018, but the last six months has seen ethnic minorities increasingly losing out. It is welcome that the government has been focusing more in recent months on how to address this – today’s figures suggest that there is a long way to go.
On employment of disabled people, the most recent data is more encouraging. Employment is up by 11 thousand on the quarter, while it has fallen for non-disabled people by 16 thousand. As a consequence, the ‘gap’ in employment rates has narrowed slightly – down from 30.2 to 29.9%. Overall, since the government announced its ambition in 2017 for one million disabled people to be in work, we’ve seen employment grow by 404 thousand – so we’re two fifths there in two years. However the employment gap has remained stubbornly wide, narrowing by just 1.4 percentage points in the same period. Disabled people remain twice as likely to be out of work as non-disabled people. As we’ve written before, addressing these inequalities in opportunity will require a step change in effort across employment policy, health services, social care, employer practice, labour market regulation and addressing public attitudes.
Finally, new data on the employment of non-UK nationals is also published today, and this shows a significant bounce back in the employment of those born in the EU 27 in particular – rising to a new record figure of 2.38 million. The small falls since the referendum have now been reversed, driven in particular by more workers from Central and Eastern European member states (who make up 107 thousand of the 129 thousand growth in employment in the last quarter). Despite everything, and in part reflecting weaker economies in the Eurozone, the UK labour market remains an attractive destination for many European workers.
About the Institute for Employment Studies (IES)
The Institute for Employment Studies is a leading independent, not-for-profit centre for research and evidence-based consultancy on employment, the labour market and HR policy and practice.
IES tweets from @EmploymtStudies
About Tony Wilson
Tony joined IES in October 2018 from his previous role as Director of Policy and Research at the Learning and Work Institute. He holds more than fifteen years’ experience of employment research, policy and programme management, leading a wide range of research programmes including disability employment, pay and progression, employment and skills devolution and employment service reform.
Interviews and further information
Please contact Steve O’Rourke, IES Senior Communications Officer on: +44 (0)1273 763 414 or email@example.com