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| UK jobs market 'loses momentum' as real wage squeeze continues – business live | UK jobs market 'loses momentum' as real wage squeeze continues – business live |
| (35 minutes later) | |
| Despite what the chancellor’s tweeted (see earlier) UK unemployment isn’t actually a record low. | |
| The current jobless rate of just 4.3% is the lowest since 1975; in early 1974 it was just 3.6%. | |
| Today’s jobless total of 1.42 million also isn’t a record - it was lower in 2004 and 2005. | |
| Thanks to economics professor Danny Blanchflower for flagging this up. | |
| @graemewearden re the chancellor's tweet you posted - today isn't the lowest unempt level ever 1,425,000 vs 6months in 2004 June-nov1,4231,4051,4011,3971,4071,423https://t.co/oib31tXf5i | |
| In another significant development, The Young Women’s Trust has warned an extra 42,000 young people dropped out of the labour market and the education sector in the last three months. | |
| This group became economically inactive, and were not in education or training either - a worrying sign. | |
| Joe Levenson, communications and campaigns director at the Young Women’s Trust, says the jump highlights the challenge facing young adults - particularly mothers with young children. | |
| Levenson says: | |
| “42,000 more young people are now economically inactive and out of education – a dramatic increase on the last quarter. | |
| “Young women in particular are telling us they want to work but hundreds of thousands are getting shut out of the jobs market, including by a lack of convenient childcare and support. While the Government focuses on reducing its unemployment figures, 343,000 young women who are not included in the numbers are being left jobless and forgotten. | |
| “At the same time, we have a youth debt epidemic, which is only set to worsen as prices rise and wages remain low. It can be especially hard for young mums; in many cases, an hour’s childcare can cost more than an hour’s wages. It’s time for action. | |
| “Much more needs to be done to improve young people’s prospects. This means giving them the right skills and support to find jobs, ensuring decent and flexible jobs are available, and extended the National Living Wage to under-25s, so they are paid the same amount for the same work. This will not only help them to become financially independent but will benefit businesses and the economy too.” | |
| This chart shows how the number of young adults who have left the labour force has risen, while those in work or looking for work has dropped: | |
| Philip Hammond, the chancellor, has just welcomed the drop in unemployment and the rise in productivity seen today. | Philip Hammond, the chancellor, has just welcomed the drop in unemployment and the rise in productivity seen today. |
| Unemployment at record low and productivity now growing at fastest rate since 2011. More still to do at Budget to lock this progress in. | Unemployment at record low and productivity now growing at fastest rate since 2011. More still to do at Budget to lock this progress in. |
| (I suspect this tweet didn’t come directly from the chancellor’s thumbs; it would be very disrespectful to tweet during Prime Minister’s Questions - as Hammond is sat next to Theresa May on the front bench) | (I suspect this tweet didn’t come directly from the chancellor’s thumbs; it would be very disrespectful to tweet during Prime Minister’s Questions - as Hammond is sat next to Theresa May on the front bench) |
| The number of people from other EU countries working in Britain has hit a record high, up by 112,000 in the last year. | The number of people from other EU countries working in Britain has hit a record high, up by 112,000 in the last year. |
| That takes the total number of EU nationals to 2.38m. There are also 28.55m UK nationals in work (up 183,000 in the last year), and 1.21 million non-EU workers (down by 23,000). | That takes the total number of EU nationals to 2.38m. There are also 28.55m UK nationals in work (up 183,000 in the last year), and 1.21 million non-EU workers (down by 23,000). |
| The number of EU nationals working in UK has reached a new record level: 2.38 million employees, from July to September this year. | The number of EU nationals working in UK has reached a new record level: 2.38 million employees, from July to September this year. |
| That’s according to today’s labour market report - here’s the key chart: | That’s according to today’s labour market report - here’s the key chart: |
| My colleague Alan Travis has examined the data, and writes: | My colleague Alan Travis has examined the data, and writes: |
| The figures from the Office of National Statistics show that the number of Polish and other east European nationals working in Britain has dropped for the first time in more than 10 years, down from 1,054,000 in the summer of 2016 to 1,035,000. | The figures from the Office of National Statistics show that the number of Polish and other east European nationals working in Britain has dropped for the first time in more than 10 years, down from 1,054,000 in the summer of 2016 to 1,035,000. |
| The number of Romanians and Bulgarians working in Britain has, however, continued to rise, from from 257,000 to 347,000 – a 90,000 increase that accounts for the majority of the overall increase in the last year. | The number of Romanians and Bulgarians working in Britain has, however, continued to rise, from from 257,000 to 347,000 – a 90,000 increase that accounts for the majority of the overall increase in the last year. |
| More here: | More here: |
| With wages lagging inflation, struggling families may be forced to hit their credit cards hard this Christmas. | With wages lagging inflation, struggling families may be forced to hit their credit cards hard this Christmas. |
| Positive Money’s director Fran Boait hopes that Philip Hammond can help next week - especially as the Bank of England has raised the cost of borrowing: | Positive Money’s director Fran Boait hopes that Philip Hammond can help next week - especially as the Bank of England has raised the cost of borrowing: |
| “As real pay continues to fall, households are being forced to borrow ever-greater amounts to make ends meet. The economy is being kept afloat on the back of families’ credit cards, at increasingly high interest rates. | “As real pay continues to fall, households are being forced to borrow ever-greater amounts to make ends meet. The economy is being kept afloat on the back of families’ credit cards, at increasingly high interest rates. |
| In the budget later this month, the Chancellor must act to boost investment and deliver a sustainable boost to incomes, before it’s too late. We’ve had a rates rise - now it’s time for a pay rise.” | In the budget later this month, the Chancellor must act to boost investment and deliver a sustainable boost to incomes, before it’s too late. We’ve had a rates rise - now it’s time for a pay rise.” |
| The Resolution Foundation, the UK think tank, fears that Britain’s jobs market is losing momentum. | The Resolution Foundation, the UK think tank, fears that Britain’s jobs market is losing momentum. |
| They are concerned by the drop in employment over the summer, as it could show the labour market is plateauing. | They are concerned by the drop in employment over the summer, as it could show the labour market is plateauing. |
| The persistent failure of wages to rise when workers have been in shorter supply is another worry. They say: | The persistent failure of wages to rise when workers have been in shorter supply is another worry. They say: |
| The biggest pay squeeze is taking place in other service sectors (-2.7%), public administration (-2.2%) and real estate (-1.9%), while pay growth is strongest in agriculture (+3.9%) and in support services (+0.8%). | The biggest pay squeeze is taking place in other service sectors (-2.7%), public administration (-2.2%) and real estate (-1.9%), while pay growth is strongest in agriculture (+3.9%) and in support services (+0.8%). |
| Stephen Clarke, Resolution’s economic analyst, expects real wages to keep falling for the next few months. He says: | Stephen Clarke, Resolution’s economic analyst, expects real wages to keep falling for the next few months. He says: |
| “After years of impressive growth, there are signs that the labour market may be losing momentum. | “After years of impressive growth, there are signs that the labour market may be losing momentum. |
| “The still strong picture on employment still refuses to have any meaningful impact on wage growth, as Britain’s pay squeeze is getting deeper. | “The still strong picture on employment still refuses to have any meaningful impact on wage growth, as Britain’s pay squeeze is getting deeper. |
| “Today’s welcome productivity figures offer a glimmer of hope on pay, though it’s too early to say whether it can grow into a meaningful recovery.” | “Today’s welcome productivity figures offer a glimmer of hope on pay, though it’s too early to say whether it can grow into a meaningful recovery.” |
| Resolution have also produced some charts to explain the pay squeeze: | Resolution have also produced some charts to explain the pay squeeze: |
| The continuing pay squeeze means that there has been little progress in returning to pre-crisis levels of pay this year. We’re still £16 down from 2008 peak. pic.twitter.com/1n9eaogRWV | The continuing pay squeeze means that there has been little progress in returning to pre-crisis levels of pay this year. We’re still £16 down from 2008 peak. pic.twitter.com/1n9eaogRWV |
| The pay squeeze is being felt across the economy. The public sector is being squeezed harder than the private sector, with only agriculture, admin, finance and the arts escaping pic.twitter.com/9YcjtG1G43 | The pay squeeze is being felt across the economy. The public sector is being squeezed harder than the private sector, with only agriculture, admin, finance and the arts escaping pic.twitter.com/9YcjtG1G43 |
| In the short-run this pay squeeze is about higher inflation. However, in the long-run only productivity improvements can address sluggish nominal wage growth pic.twitter.com/vFtxRnwOpJ | In the short-run this pay squeeze is about higher inflation. However, in the long-run only productivity improvements can address sluggish nominal wage growth pic.twitter.com/vFtxRnwOpJ |
| Amid the real wage gloom, there is an encouraging sign..... Britain’s economy appears to have become more productive. | Amid the real wage gloom, there is an encouraging sign..... Britain’s economy appears to have become more productive. |
| The ONS estimates that productivity per hour grew by 0.9% in the third quarter of 2017. | The ONS estimates that productivity per hour grew by 0.9% in the third quarter of 2017. |
| That’s the first increase since the end of 2016, and is the highest rate of growth since Quarter 2 2011. | That’s the first increase since the end of 2016, and is the highest rate of growth since Quarter 2 2011. |
| This could be a crucial factor in getting wages up -- as bosses have been blaming weak productivity for the meagre pay increases doled out to their staff. | This could be a crucial factor in getting wages up -- as bosses have been blaming weak productivity for the meagre pay increases doled out to their staff. |
| David Willett, Corporate Director at The Open University, says it’s an ‘encouraging development’, adding: | David Willett, Corporate Director at The Open University, says it’s an ‘encouraging development’, adding: |
| “For too long the UK has been lagging behind, with a lack of higher skills limiting the agility and adaptability needed to drive organisations forward. Stagnant productivity is a significant barrier to growth at an uncertain time when we need to ensure the stability of our economy. | “For too long the UK has been lagging behind, with a lack of higher skills limiting the agility and adaptability needed to drive organisations forward. Stagnant productivity is a significant barrier to growth at an uncertain time when we need to ensure the stability of our economy. |
| “Organisations now need to keep this up. With technology advancing at a rapid rate, and businesses looking to automate where they can, low-skilled jobs are increasingly under threat. It’s crucial that organisations invest in training their staff to build up essential technical and soft skills to future-proof them against changes in the political, economic and technological environment.” | “Organisations now need to keep this up. With technology advancing at a rapid rate, and businesses looking to automate where they can, low-skilled jobs are increasingly under threat. It’s crucial that organisations invest in training their staff to build up essential technical and soft skills to future-proof them against changes in the political, economic and technological environment.” |
| There’s something for everyone in today’s jobs report. | There’s something for everyone in today’s jobs report. |
| Britain’s minister for employment, Damian Hinds, has hailed the drop in UK unemployment: | Britain’s minister for employment, Damian Hinds, has hailed the drop in UK unemployment: |
| “The strength of the economy is driving an increase in full-time, permanent jobs and a near-record number of people are now in work thanks to the Government’s welfare reforms. | “The strength of the economy is driving an increase in full-time, permanent jobs and a near-record number of people are now in work thanks to the Government’s welfare reforms. |
| “When unemployment fell to 5% early last year, many people thought it couldn’t get much lower, and yet it now stands at 4.3%.” | “When unemployment fell to 5% early last year, many people thought it couldn’t get much lower, and yet it now stands at 4.3%.” |
| Everyone should be given the opportunity to find work and enjoy the stability of a regular pay packet. We’ve cut income tax for 30 million people since 2010, meaning people keep more of their money each month.” | Everyone should be given the opportunity to find work and enjoy the stability of a regular pay packet. We’ve cut income tax for 30 million people since 2010, meaning people keep more of their money each month.” |
| But the labour market looks quite different if you’re on the opposition front bench. | But the labour market looks quite different if you’re on the opposition front bench. |
| Debbie Abrahams MP, Shadow Work and Pensions Secretary, points out that the cost of living squeeze hasn’t abated: | Debbie Abrahams MP, Shadow Work and Pensions Secretary, points out that the cost of living squeeze hasn’t abated: |
| “Today’s stats are further evidence of Tory economic failure, only a week out from their next Budget. | “Today’s stats are further evidence of Tory economic failure, only a week out from their next Budget. |
| “Both employment and real wages are falling while the price of household essentials balloons, leaving millions of people worse off than they were in 2010. | “Both employment and real wages are falling while the price of household essentials balloons, leaving millions of people worse off than they were in 2010. |
| “Over seven million people live in poverty in working households. | “Over seven million people live in poverty in working households. |
| “Labour will introduce a £10 an hour real Living Wage, scrap the public sector pay cap and reform the government’s failing Universal Credit programme.” | “Labour will introduce a £10 an hour real Living Wage, scrap the public sector pay cap and reform the government’s failing Universal Credit programme.” |
| Britain is now suffering its second wage squeeze since the financial crisis, as this chart from the FT shows: | Britain is now suffering its second wage squeeze since the financial crisis, as this chart from the FT shows: |
| In UK, in real terms, adjusted for inflation, wages dropped 0.4% (incl. bonuses), dropped 0.5% (excl. bonuses), chart @fastFT https://t.co/F3urfnRnEh pic.twitter.com/5Sr6Mp7Lal | In UK, in real terms, adjusted for inflation, wages dropped 0.4% (incl. bonuses), dropped 0.5% (excl. bonuses), chart @fastFT https://t.co/F3urfnRnEh pic.twitter.com/5Sr6Mp7Lal |
| How can unemployment and employment both have fallen, I hear you cry. | How can unemployment and employment both have fallen, I hear you cry. |
| The answer is that the number of adults classed as ‘economically inactive’ has gone up. | The answer is that the number of adults classed as ‘economically inactive’ has gone up. |
| That means more people have simply dropped out of the labour market altogether. | That means more people have simply dropped out of the labour market altogether. |
| Geraint Johnes, Research Director at the Work Foundation and Professor of Economics at Lancaster University Management School, explains: | Geraint Johnes, Research Director at the Work Foundation and Professor of Economics at Lancaster University Management School, explains: |
| “The latest labour market statistics show unemployment continuing to fall – by some 59000 between the second and third quarters of this year. The unemployment rate now stands at 4.3%. | “The latest labour market statistics show unemployment continuing to fall – by some 59000 between the second and third quarters of this year. The unemployment rate now stands at 4.3%. |
| The most recent fall, however, is due largely to a large increase in the number of people deemed economically inactive. | The most recent fall, however, is due largely to a large increase in the number of people deemed economically inactive. |
| And here’s the key chart, showing how the number of economically inactive people in Britain rose by 151,000 in the last quarter. | And here’s the key chart, showing how the number of economically inactive people in Britain rose by 151,000 in the last quarter. |
| That will include students, people stopping work to care for a family member, or look after young children, or just giving up the search for a job altogether. | That will include students, people stopping work to care for a family member, or look after young children, or just giving up the search for a job altogether. |
| Big surge in economically inactive (working-age) also linked to jump in ‘students’ up 19% q/q and 22% y/y in Q3. Students highest level in over 4 years. | Big surge in economically inactive (working-age) also linked to jump in ‘students’ up 19% q/q and 22% y/y in Q3. Students highest level in over 4 years. |
| Professor Johnes has also spotted that more people are only working part-time: | Professor Johnes has also spotted that more people are only working part-time: |
| Meanwhile, part-time employment has risen, with an increase of 18000 part-time employees and 45000 part-time self-employed. Inasmuch as it continues a trend towards greater casualisation and insecurity in the labour market, this should be noted as a cause for concern. Overall the level of employment has fallen. | Meanwhile, part-time employment has risen, with an increase of 18000 part-time employees and 45000 part-time self-employed. Inasmuch as it continues a trend towards greater casualisation and insecurity in the labour market, this should be noted as a cause for concern. Overall the level of employment has fallen. |
| Britain’s ongoing wage squeeze is a “huge body blow” to consumers as they try to make ends meet in the run-up to Christmas, says Maike Currie of Fidelity International | Britain’s ongoing wage squeeze is a “huge body blow” to consumers as they try to make ends meet in the run-up to Christmas, says Maike Currie of Fidelity International |
| She fears that real wage growth will remain “elusive” for some time: | She fears that real wage growth will remain “elusive” for some time: |
| With a number of factors keeping a lid on our earnings - from people working flat out in the gig economy yet still struggling with paltry pay, more and more people in self-employment, falling unionisation, automation and technology substituting man for machine, this is unlikely to change any time soon.” | With a number of factors keeping a lid on our earnings - from people working flat out in the gig economy yet still struggling with paltry pay, more and more people in self-employment, falling unionisation, automation and technology substituting man for machine, this is unlikely to change any time soon.” |
| Nick Macpherson, formerly the top civil servant at the Treasury, fears that the UK labour market is cooling.... | Nick Macpherson, formerly the top civil servant at the Treasury, fears that the UK labour market is cooling.... |
| Small but perceptible signs UK laour market may be beginning to turn after very good run. Inactivity⬆Vacancies, employment and real wages⬇ | Small but perceptible signs UK laour market may be beginning to turn after very good run. Inactivity⬆Vacancies, employment and real wages⬇ |
| Here are some charts showing the state of the UK labour market: | Here are some charts showing the state of the UK labour market: |