Our response to the January 2019 release of ONS labour market statistics

Press Releases

22 Jan 2019

Tony Wilson, Director of the Institute for Employment Studies (IES), comments on the January 2019 release of ONS labour market statistics release.

‘The new year has picked up where 2018 left off, with employment records tumbling and pay packets growing. Employment is higher than it has ever been, the unemployment rate is at its lowest since 1975, earnings growth is at its strongest in a decade, and low inflation means that this is feeding through into strong “real” pay growth for the first time in two years.

‘So, where do we go from here? With unemployment so low, vacancies at their highest ever and EU migration slowing, there is very little spare capacity to meet employer demands. In recent years, we’ve seen more people joining the workforce from “economic inactivity” – typically parents, older people and those with health conditions – but this is slowing fast, with fewer economically inactive people saying that they want a job than ever before. This lack of capacity may well be fuelling pay growth, and, in turn, may start to feed through into inflation.

‘On the other hand, today’s numbers cover the jobs market as it was between September and November last year – so just before the crises which followed the Brexit withdrawal deal. It may well be that in the next few months’ releases we start to see vacancies and recruitment slowing down and some of the heat being taken out of the labour market. However, this doesn’t change the fact that we need to do more to increase labour market participation and raise productivity.

‘Beneath these headline figures, a few other points stand out this month. First, the overall employment rate – of all of those aged 16 and over – has finally surpassed the record it previously set back in 1973. So, this month, for the first time, we can say that the UK employment rate is at its highest ever, at 61.2 per cent. The labour market has changed almost unrecognisably since then, but this is a record of which we can all be proud. Secondly, today’s figures show a welcome jump in youth employment, with the employment rate now up to its highest since before the downturn.’

‘Today also sees the government’s first publication of a new “alternative” claimant count series. This seeks to adjust the historic claimant count data to account for the impact of Universal Credit rollout. This new analysis shows that the claimant count has been broadly flat since 2016, once changes in Universal Credit rules are taken into account (and in particular, the requirement that those who would previously have only claimed Housing Benefit must look for work). While this is broadly welcome, given that headline unemployment has fallen since 2016 while the “alternative” count has not, there must remain questions as to whether Universal Credit has had any impact on unemployment. More work on this is needed.’


Interviews and further comment

Please contact Mark Jack, IES communications officer:

Telephone: 01273 763 435

Email: mark.jack@employment-studies.co.uk