UK workforce hits record high, but real wages continue to be squeezed

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The number of people in work across the UK is at a record high, while the level of real pay continues to fall, according to the latest labour market data from the Office for National Statistics (ONS).

In the three months to November 2017, UK unemployment fell by 3,000 to 1.44 million, taking the UK's unemployment to 4.3% - a four-decade low.

However, average wages grew by 2.4%, well below the 3.1% rate of inflation and squeezing real wages, which are now lower than November 2016.

Northern Ireland’s seasonally adjusted Labour Market Survey (LMS) measure also saw unemployment fall to 3.8% in the three months to November, the lowest reported figure since 2007. This latest LMS unemployment rate is less than the UK average of 4.3%, the EU average of 7.4% and Republic of Ireland, at 6%.

 

David Armstrong, PwC Northern Ireland partner, said the fall in local unemployment in 2017 was coupled with an increase in economic inactivity, which has been creeping up since a record low in 2016:

 

“While LFS data show a continued decline in the jobless total, the more recent December Claimant Count unemployment measure rose marginally by 100, with 29,200 people (3.2%) of the workforce claiming unemployment related benefits. While that was the first increase since January 2013, it’s hardly significant in the context of claimant count unemployment that has fallen by 35,600 (54.9%) over that period.

 

“Taken over the year, the fall in unemployment been welcome but we have also seen a parallel rise in economic inactivity, which has been increasing since the record low in 2016. The inactivity rate at for the three months to November 2017 is 28.2%, an increase of 1.7% the year and is now the highest recorded since 2010 and the highest amongst the UK regions.”

 

Commenting on today’s overall UK labour market data, John Hawksworth, chief economist at PwC, said:

 

"After seeming to stall over the last couple of months, today's labour market data showed the UK jobs engine kicking back into life. But as the labour market tightens, earnings growth has started to edge up.

 

"Overall UK employment rose by just over 100,000 in the three months to November 2017 compared to the previous three months and the employment rate rose back to the record high of 75.3% recorded earlier in 2017. The unemployment rate remained at 4.3%, but inactivity rates have fallen back again.

 

"The tightness of the labour market is shown by a record number of vacancies. This has fed through to a slight rise in regular pay growth to 2.4%, although this remains some way below the latest inflation rate of 3.1%, so real earnings levels continue to be squeezed for now.

 

"If this pattern of solid jobs growth and a gradual pick-up in earnings growth were to persist through the year, then this could push the MPC towards a further interest rate rise later in 2018."

 

Ends.

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John Compton
Corporate Affairs, Northern Ireland and Deputy Head of UK Media Relations, PwC United Kingdom
Tel: +44(0)7799 346 925
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