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| UK unemployment rate hits new 44-year low but wage growth slows - business live | UK unemployment rate hits new 44-year low but wage growth slows - business live |
| (32 minutes later) | |
| Here’s the full story: | |
| UK wage growth stalls despite record employment | |
| Disappointing news: Britain’s economy has become even less productive. | |
| Labour productivity – effectively the amount of output we produce -- fell by 0.2% in the last three months, the third consecutive quarterly fall. | |
| It’s a consequence of firms failing to invest in new machinery and equipment, and instead relying on recruiting more workers to cover the gaps. | |
| Major downside of strong UK job growth is persistently weak labour productivity. Output per hour down 0.2% in q1 compared with previous year, third consecutive decline. https://t.co/BDri9lLIXP pic.twitter.com/ZoSuE65x9A | |
| John McDonnell MP, Labour’s Shadow Chancellor, blames the “do-nothing Government”. | |
| “With business investment also falling and wages still lower than a decade ago, we have an economy in a state of neglect, damaged by years of Tory mismanagement. | |
| This Government is falling apart, but it must not bring the economy down with it.” | |
| The Young Women’s Trust has also warned that young people, particularly those with children, face a tough task in the current economic climate: | |
| Communications and campaigns director Joe Levenson says: | |
| “Today’s data shows a fall in young women’s unemployment and economic inactivity, which is welcome news. | |
| “Wage growth, however, has slowed and we remain concerned about young people getting stuck on low pay. | |
| “We know that young women are already struggling to get by – and this will only make it harder. Many face inescapable debt, a battle to put food on the table and, in some cases, are having to leave work as an hour’s childcare costs more than an hour’s wages. | |
| “Young people need hope for a more secure financial future. That means extending the Government’s National Living Wage to under-25s, so they can keep up with the cost of living, and giving them the skills to get good jobs. | |
| The news that Britain’s unemployment rate is the lowest since Harold Wilson ran the country won’t cheer the four million people who are trapped in poverty, despite working. | |
| The classic relationship between unemployment and wages (when one goes down, the other goes up) seems to have broken down badly, especially for those struggling the most. | |
| Reporter Josephine Moulds met with one of those people -- 34-year old single mother Gemma. She’s spoken about the battle to stay afloat while earning £399.69 a month as a cashier at Betfred. | |
| Even with tax credits and child benefit topping up her meagre wages, it was a constant struggle to pay for the essentials and Gemma fell behind on her bills. She was already receiving letters, phone calls, texts and emails threatening legal action over previous unpaid bills, as well as £400 of benefit overpayments that had to be repaid. | |
| Her son’s birthday was an added pressure but, she says with a weak smile: “I always seem to pull it out of the bag somehow.” Having scraped through the month, she then put whatever she could afford – usually about £20 – towards her debts. | |
| In the end, the battle to juggle a changing shift patten with caring for a young child proved too much. Here’s the full story: | |
| 'You can’t really win': 4m Britons in poverty despite having jobs | |
| TUC General Secretary Frances O’Grady is concerned that wage growth slowed last month (to just 1.3%, including bonuses, after inflation). | |
| She says: | |
| “Pay growth is stalling again. The last thing workers need is another hit in the pocket when real wages are still lower than a decade ago. | |
| “The government must raise the minimum wage to £10 as quickly as possible. And give unions the freedom to enter every workplace to negotiate fair pay rises.“ | |
| Today’s jobs report also shows how the rise in women’s retirement age is keeping hundreds of thousands of people working longer. | |
| The ONS reports that the number of women classed as economically inactive has fallen sharply since 2014. | |
| That includes: | |
| women looking after the family or home (down 254,000) | |
| women taking early retirement (down 239,000) | |
| women looking after the family or home (down 254,000) | |
| women taking early retirement (down 239,000) | |
| The ONS says: | |
| This reflects ongoing changes to the State Pension age, resulting in fewer women retiring between the ages of 60 and 65 years, as well as more women in younger age groups participating in the labour market. | |
| We learned last month that the number of women over 50 in employment has hit a record high, which experts attributed to the increase in the state pension age to 65, from 60 a few years ago. | |
| That sparked the WASPI campaign - with women born in the 1950s saying they weren’t given proper notice of the changes, leaving them facing financial problems. | |
| Rise in women’s state pension age prompts poverty concerns | |
| Today’s jobs report also shows that EU (excluding UK) and non-EU nationals took almost half of the new jobs created in the UK in the last year. | Today’s jobs report also shows that EU (excluding UK) and non-EU nationals took almost half of the new jobs created in the UK in the last year. |
| Here’s the details: | Here’s the details: |
| UK nationals working in the UK increased by 190,000 to 28.94 million | UK nationals working in the UK increased by 190,000 to 28.94 million |
| EU nationals working in the UK increased by 98,000 to 2.38 million | EU nationals working in the UK increased by 98,000 to 2.38 million |
| non-EU nationals working in the UK increased by 80,000 to 1.32 million | non-EU nationals working in the UK increased by 80,000 to 1.32 million |
| Gerwyn Davies, senior labour market analyst at HR body CIPD, says workers from outside the EU are helping to fill important vacancies in, for example, the NHS. | Gerwyn Davies, senior labour market analyst at HR body CIPD, says workers from outside the EU are helping to fill important vacancies in, for example, the NHS. |
| He writes: | He writes: |
| “It is easy to see why employers have turned to non-EU workers in relatively large numbers against the backdrop of a tightening labour market. What’s more, contrary to some recent reports, virtually all of the employment growth during the past year has come from skilled, permanent, full-time jobs. This has allowed employers to largely overcome the restrictions they encounter when recruiting non-EU workers that do not currently apply to EU workers. | “It is easy to see why employers have turned to non-EU workers in relatively large numbers against the backdrop of a tightening labour market. What’s more, contrary to some recent reports, virtually all of the employment growth during the past year has come from skilled, permanent, full-time jobs. This has allowed employers to largely overcome the restrictions they encounter when recruiting non-EU workers that do not currently apply to EU workers. |
| Non-EU workers are therefore playing a key, complementary role in the UK workforce; especially in sectors such as healthcare. Looking ahead, the data may herald a structural shift towards hiring more non-EU workers when restrictions are loosened for non-EU workers and tightened for EU workers from 2021.” | Non-EU workers are therefore playing a key, complementary role in the UK workforce; especially in sectors such as healthcare. Looking ahead, the data may herald a structural shift towards hiring more non-EU workers when restrictions are loosened for non-EU workers and tightened for EU workers from 2021.” |
| Davies also suggests that this trend is keeping wage growth down: | Davies also suggests that this trend is keeping wage growth down: |
| “The relatively sharp growth in the number of non-UK born workers in employment has also acted as a brake on salaries rising more quickly; especially in shortage occupations. This will come as a relief to employers who have been subjected to increasing pressure from workers to raise pay without accompanying productivity growth. | “The relatively sharp growth in the number of non-UK born workers in employment has also acted as a brake on salaries rising more quickly; especially in shortage occupations. This will come as a relief to employers who have been subjected to increasing pressure from workers to raise pay without accompanying productivity growth. |
| The proportion of UK adults classed as economically inactive (not in work or seeking employment) has dropped to 20.8%, close to a record low. | The proportion of UK adults classed as economically inactive (not in work or seeking employment) has dropped to 20.8%, close to a record low. |
| This is down to a drop in students, reports economist Rupert Seggins. | This is down to a drop in students, reports economist Rupert Seggins. |
| Number of people not in work & not looking for work (termed: "inactive") was 69k lower than in 2018 Q1. Mainly down to fewer students. Building on a point from @billwells_1 last month, note that numbers of LT sick & "other" (poss. link to Univ. Credit rollout) have been rising. pic.twitter.com/SbXq1SCgml | Number of people not in work & not looking for work (termed: "inactive") was 69k lower than in 2018 Q1. Mainly down to fewer students. Building on a point from @billwells_1 last month, note that numbers of LT sick & "other" (poss. link to Univ. Credit rollout) have been rising. pic.twitter.com/SbXq1SCgml |
| There are now 32.70 million people in employment, 354,000 more than a year ago. | There are now 32.70 million people in employment, 354,000 more than a year ago. |
| That helped push the employment rate to a joint record-high of 76.1%, impressive given the uncertainty over Britain’s exit from the EU. | That helped push the employment rate to a joint record-high of 76.1%, impressive given the uncertainty over Britain’s exit from the EU. |
| Andrew Wishart of Capital Economics suspects that Brexit uncertainty may have forced companies to hire staff: | Andrew Wishart of Capital Economics suspects that Brexit uncertainty may have forced companies to hire staff: |
| The continued strength of employment in the first quarter of 2019 probably reflects heightened economic activity as firms brought forward purchases and output in preparation for a possible no-deal Brexit. Now that risk has passed, activity and employment growth are likely to soften. | The continued strength of employment in the first quarter of 2019 probably reflects heightened economic activity as firms brought forward purchases and output in preparation for a possible no-deal Brexit. Now that risk has passed, activity and employment growth are likely to soften. |
| Employment minister Alok Sharma has hailed today’s drop in unemployment to just 3.8%, but also warned that workers need to improve their skills. | Employment minister Alok Sharma has hailed today’s drop in unemployment to just 3.8%, but also warned that workers need to improve their skills. |
| Sharma says: | Sharma says: |
| “Rising wages and booming higher-skilled employment means better prospects for thousands of families, and with youth unemployment halving since 2010, we are creating opportunities for all generations. | “Rising wages and booming higher-skilled employment means better prospects for thousands of families, and with youth unemployment halving since 2010, we are creating opportunities for all generations. |
| “We now need to shift some of our focus to up-skilling people and supporting them into roles with real career progression to create a modern workforce fit for the challenges of the 21st Century.” | “We now need to shift some of our focus to up-skilling people and supporting them into roles with real career progression to create a modern workforce fit for the challenges of the 21st Century.” |
| This chart shows how wage growth weakened a little last month, particularly for those lucky enough to get a bonus (their earnings growth fell from 3.5% to 3.2%): | This chart shows how wage growth weakened a little last month, particularly for those lucky enough to get a bonus (their earnings growth fell from 3.5% to 3.2%): |
| At first glance, today’s drop in unemployment suggests Britain’s economy is shrugging off Brexit uncertainty and marching onwards. | At first glance, today’s drop in unemployment suggests Britain’s economy is shrugging off Brexit uncertainty and marching onwards. |
| But actually, some firms are hiring rather than investing in expensive new machinery. Why? Because it’s cheaper and easier to lay off staff if a no-deal Brexit suddenly blows a hole in your supply chain, or leaves you struggling to export. | But actually, some firms are hiring rather than investing in expensive new machinery. Why? Because it’s cheaper and easier to lay off staff if a no-deal Brexit suddenly blows a hole in your supply chain, or leaves you struggling to export. |
| Tom Stevenson, investment director for Personal Investing at Fidelity International, explains: | Tom Stevenson, investment director for Personal Investing at Fidelity International, explains: |
| The murky outlook is leading businesses to hire now with the option to fire later rather than make irreversible investments in new kit. Perhaps it is still too soon to get ahead of ourselves, though - a week before new inflation data, there’s a question mark over how real the earnings growth is. | The murky outlook is leading businesses to hire now with the option to fire later rather than make irreversible investments in new kit. Perhaps it is still too soon to get ahead of ourselves, though - a week before new inflation data, there’s a question mark over how real the earnings growth is. |
| Rising wages are bound in due course to feed through into wider price rises. | Rising wages are bound in due course to feed through into wider price rises. |