UK Employment Figures, September 2018: Wages the Silver Lining as Employment Growth Slows
Employment flatlines amid early signs of improvements in pay.
Economic gravity appears to be catching up with Britain’s job creation boom after new ONS data showed employment increased by only 3,000 between March and June.
Employment figures showed that while the economy may still be creating new jobs, the rate at which it does has slipped from prodigious to ponderous. In fact, job growth was only positive in the June quarter thanks to the increase in employment among people aged 65 and over.
This is hardly a complete reversal of fortune. Despite a second successive decline in the employment rate, employment remains high and an increasing proportion of employees are in full-time jobs.
Meanwhile with the unemployment rate remaining flat at 4.0% — its lowest level for 43 years — and the number of EU nationals in Britain on the slide, the tightness of the labour market is finally starting to translate into accelerating wage growth.
As the pool of available talent shrinks, employers are having to fight harder for every new recruit. As fewer people want to increase their hours, businesses are tapping into the pool of older workers and offering bigger pay packets in an attempt to attract new staff.
Nevertheless recent wage rises remain modest at best. Average weekly earnings for employees excluding bonuses are 2.9% higher than a year ago. However, average pay adjusted for inflation is still below its pre-crisis peak in 2008.
If real wages had continued growing at their pre-crisis trend, the average person would now be earning £130 more per week than they actually do.
It remains to be seen whether wage growth picks up further in the coming months, as employers consider their hiring plans for the rest of the year. While recent pay rises are a welcome sign for the labour market, weak productivity growth and continued Brexit-related uncertainty suggest a rocky road ahead.
Pawel Adrjan is Head of EMEA Research at the Indeed Hiring Lab and a Research Fellow at Regent’s Park College, University of Oxford. Before joining Indeed, Pawel spent over a decade in investment banking, holding senior roles in risk management, credit ratings advisory, and treasury at Goldman Sachs and Barclays in London and New York. His research focuses on a wide range of labour market topics, such as wages, pensions and the impact of technology on jobs. Pawel speaks Polish, Spanish and French. He has completed a B.A. in international studies and a B.S. in economics from the University of Pennsylvania and an M.Phil. and a Ph.D. in economics from the University of Oxford.