UK Employment Figures, January 2019: Employment and Pay Growth Defy Brexit Uncertainty
Employment rate rises to new record high and pay remains on an upward trend despite political headwinds
The UK labour market continued to grow in late 2018 despite Brexit-related uncertainty. ONS data showed that strong employer demand for staff pushed the employment rate up to a new record level of 75.8% but the question now is whether the supply of available workers risks being stretched to breaking point. With the unemployment rate falling again to a 44-year low of 4.0%, and a decline in inactivity, there simply are not enough jobseekers to keep up with demand from employers. As a result, the number of vacancies continues to creep up.
Concerns about recruitment difficulties are being exacerbated by Britain’s waning appeal to European workers. Migration data shows EU citizens are leaving the UK at the fastest rate for more than two decades and Indeed’s online job search data shows that the UK’s gravitational pull as a source of jobs is weakening. As labour markets in many other European economies continue to generate solid wage growth and the weak pound and Brexit uncertainty weigh on Britain’s appeal, more EU workers are finding reasons to return home — or to look for work elsewhere.
The net effect is a surplus of jobs that are difficult to fill. While in the short term this is propelling wages upwards as employers fight to attract talent, in the longer term businesses will need to tap into underutilised sources of workers like single parents, people with disabilities and ethnic minorities as well.
Pawel Adrjan is the UK Economist 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.