The March Labour Market Report released by the Office for National Statistics continued to post record-breaking numbers for the nation’s labour market. In the quarter covering November 2018 through January 2019, the highest percentage of people were working in the UK since comparable records have been kept. Nominal wages rose 3.4 per cent, the highest year-over-year level in over a decade.
The number of people working in the UK rose by 222,000 to 32.71 million. This is the highest figure since records began in 1971.
The unemployment rate fell to 3.9 per cent, the lowest rate since 1975.
The UK economic inactivity rate was estimated at 20.7 per cent, lower than for a year earlier (21.2 per cent) and the lowest figure on record.
473,000 more people were working in the UK than a year earlier.
The employment level for men was estimated at 80.5 per cent; it has not been higher since December 1990 to February 1991. For women, the employment level was estimated at 71.8 per cent, the highest level on record.
Brexit Uncertainty – Why All the Good News is Greeted Without Celebration
In the past, record-breaking jobs reports would have been greeted with great enthusiasm. But the mood of economists, analysts and politicians has been tempered by continuing uncertainty of Brexit. The UK was scheduled to leave the European Union at the end of March. But after Parliament voted to request a delay, there is no more clarity about what a post-Brexit world would look like than in the three months covered in the Labour Market Report.
So with so much uncertainty, why do employers keep hiring? Bloomberg offers sobering analysis:
“One explanation for the resilience of the labor market is that firms are hiring workers rather than spending on capital equipment because employment decisions are easier to reverse in a downturn.
However, with economic growth having slowed to just 0.2 percent, economists say it is only a matter a time before the labor market succumbs. Surveys may already be pointing the way. The latest PMI (Purchasing Managers Index) reports, for example, show employment is now falling across both the manufacturing and services sectors against a backdrop of Brexit and the weakest global growth since the financial crisis.”
Some economists suggest that the strong hiring numbers may be an indicator of weakening confidence in the economy:
“The robust picture of the jobs market may, however, mask several potential problems facing the UK economy, with the figures covering a period when GDP growth cooled from the higher levels seen last summer.
Observers said companies were likely to have hired workers to meet demand, instead of investing in productivity-boosting technology – paving the way for weaker growth in future.”
UK Workforce: Less European, Still International, But with Rising Costs for Employers
There are continuing signs that Brexit is having an effect on the makeup of the nation’s labour force. There were 61,000 fewer EU nationals working in the UK in the third quarter of 2018 than a year before, while the number of non-EU nationals increased by 130,000.
As a BBC correspondent noted:
“Since the referendum in June 2016, a clear pattern has emerged. Immigration to the UK from the European Union has declined while the number of people coming from outside the bloc has gone up.
It may be that the two trends are not related, but it seems likely that they are.
With fewer EU workers available than before, businesses and the public sector appear to be looking further afield to fill vacancies.
That’s reflected in the statistics for those arriving with a “definite job”.
The number of EU citizens in that category dropped from 108,000 in the 12 months before the referendum to 70,000 in the year to last September, whereas non-EU migrants coming to Britain with a definite job offer went up from 51,000 to 69,000.”
Employers looking to attract and retain international talent should plan for increased costs in the coming years.
“Currently, employers already have to pay out to recruit international staff. Yet once the skills-based immigration system comes into effect in 2021, recruiters and managers will have to ramp up their efforts – and their budgets.
They will need to apply for a Sponsor Licence in order to legally recruit overseas workers – a process which the CBI criticised for being “prohibitively complex, time-consuming and an expensive process to navigate”.
Once obtained, employers will need to issue a Certificate of Sponsorship (CoS) per every non-UK employer which, of course, comes with a cost of £199 every time.
Employers will also need to pay a Skills Charge of £1,000 per every non-UK recruit, too.
Once the skills-based immigration system comes into effect in 2021, recruiters and managers will have to ramp up their efforts – and their budgets.”
For some companies and businesses, particularly new and smaller organisations, the prices mark recruiting international talent as unreachable. Those crippled by the charges will have little choice but to recruit from the limited pool of residential UK talent, placing them at further disadvantage against global competitors.
Most UK businesses will have to raise wages while simultaneously reign in their expenditure in order to recruit and appear attractive in the market. Yet such efforts could go to waste: EU talent may rather work in one of the remaining 27 EU member states that still offer frictionless – and free – mobility.”
Raise a Pint to Higher Wages
Even if many economists and analysts can’t enjoy a stellar labour market report because even the best news may have underlying troubling causes, those who want to celebrate can do so with more money in their pockets. The annual rise in nominal wages at 3.4 per cent is far ahead of the 2.1 per cent inflation rate during the same period. And with economic inactivity at its lowest level on record, more workers in the UK are enjoying burgeoning pay than ever before. And regardless of concerns about what tomorrow may bring, there is more than sufficient cause for revelry in today’s report.