There are mixed signals in today’s jobs figures for the UK. Optimists will point to continued record employment, a slight fall in unemployment and earnings growth higher than at any point since the recession – despite everything, the labour market is still going strong. For pessimists though, there are strong signs of things slowing down: vacancies have fallen to their lowest since 2017, the growth in employment is virtually flat, and the number of young people not in employment or education is rising again. So what is really going on?
Four stories stand out:
First, employment is still going up – but it appears to be slowing. After remarkably strong figures last month, where employment rose by over 100 thousand on the previous quarter, the quarterly change today is back in line with recent months at just 30 thousand. Underneath this, virtually all of the growth in employment this month is explained by self-employment – with the number of employees virtually unchanged. Combined with vacancies falling back to where they were in 2017, there are clear signs today that employer demand is weakening.
The supply of older workers is continuing to drive employment growth
Secondly, as with recent months, the supply of older workers is continuing to drive employment growth in the labour market. The number of people aged over 50 in work rose by a further 70 thousand over the previous quarter, while employment fell for those aged under 50 (down by 40 thousand on the quarter). And for young people specifically, the number not in employment or full-time education is up by 40 thousand and back close to one million (986 thousand). These figures are particularly concerning, as youth worklessness is often also a strong indicator of weaker demand.
Thirdly, the number of people off work due to long-term sickness has risen sharply this quarter – up by nearly 80 thousand to 2.05 million – even while short-term sickness rates have fallen. Addressing the disadvantages faced by disabled people and those with long-term health conditions has been a top priority for government, so these figures are particularly disappointing.
Finally, the earnings figures are undoubtedly good news and reflect growing pay in both the public and private sectors. At 4.0%, headline total pay growth is its highest since 2008, while the growth in real earnings is above 2% for the first time in four years. Average real earnings have now returned to the levels that they were at in 2010, but not recovered all of the ground lost since the recession. However whether these strong figures can continue, with employer demand appearing to weaken and the fall in the value of sterling likely to feed through into higher inflation, will remain to be seen.