UK labour market statistics: Good news to end the year, but reasons to be cautious

Tony Wilson, director of the Institute for Employment Studies (IES), comments on the December 2018 ONS labour market statistics release.

‘Today’s employment figures have delivered some rare good news to end the year, with little sign that the crippling uncertainty over Brexit has yet fed through to the jobs market.

‘The number of people in work continues to set records, driven by a growing population and more older people and women in work. Unemployment is at its lowest since 1976, while the ‘economic inactivity’ rate – counting those out of work and not looking or available for work – has reached its lowest level on record at 21 per cent (with just one in five of these people stating that they want to work).

‘To add to the seasonal cheer, real earnings have reached their highest since 2010, and wages continue to grow at a strong rate – with nominal pay up by 3.3 per cent over the last year, its highest since before the recession.

‘However, today’s figures also give us three reasons to be cautious.

‘First, today’s figures cover the period from July to September, and so of course do not pick up the political and economic turbulence of the last few months. Indeed more recent Claimant Count data has been rising strongly (although this is being driven in part by Universal Credit rollout).

‘Second, there are signs of increasing ‘tightness’ in the labour market which could in turn feed through into inflationary pressures next year. The number of unemployed people per vacancy is at a historic low, while vacancies overall are close to 850,000. Meanwhile, both the rates of temporary employment and involuntary part-time work have reached their lowest levels since 2008, which is of course welcome but suggests that ‘slack’ in the labour market is increasingly being used up.

‘Third, these strong national figures disguise significant variations across the country – with employment growing strongly in London and the North West but falling in the West Midlands, Northern Ireland and South West.

‘So, while the jobs market is ending the year on a high, we should not let up on improving productivity, raising participation and supporting local growth.’

ENDS

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