Our labour market analysis

August 2017

Learning and Work Comment

The labour market figures published on 16 August show another strong increase in employment, with unemployment and economic inactivity amongst people of working age both falling. However, while the job prospects for individuals are encouraging, people in work are getting poorer with real wages again falling.

Duncan Melville, Chief Economist at Learning and Work Institute, commented: 

Employment growth in the three months to April to June 2017 was again strong and exceeded 100,000 for the fourth consecutive month. Unemployment and levels of inactivity amongst people of working age both fell. The working age employment and inactivity rates again reached record highs and lows respectively, and the unemployment rate fell to 4.4%, the lowest level for 42 years. 

Annual wage growth (regular pay excluding bonuses) was 2.1%, in the three months April to June 2017. However, this is below the current inflation rate and real wages declined, by half a percent, for the fourth month in a row. 

While the overall labour market continues to be strong, the impact of Brexit can be seen in a slowdown of employment growth amongst EU nationals in the UK. This growth in the year to June 2017 was 5.6% less than half the rate of growth seen a year ago, before the EU referendum. 

If as seems likely, and today’s figures appear to herald, workers from the EU become less of an option for UK employers then this reduction in labour and skills supply will need to be filled from domestic sources. With the labour market already as tight as it is, with high employment and low unemployment, this will be a challenge and this points to the heightened importance of effective skills and employment policies, including both lifelong learning so that individuals can update their skills in response to changing economic demands and the recruitment and retention of disabled people, where today's figures continue to show that less than 50% of disabled people are in employment.”

Employment rose by 125,000 between January to March 2017 and April to June 2017. In the last 12 months employment has grown by 338,000. 

Unemployment fell by 57,000 between January to March 2017 and April to June 2017. and the unemployment rate fell 0.2 percentage points to 4.4% in the quarter the lowest level since 1975. 

Economic inactivity fell by 64,000 between January to March 2017 and April to June 2017. and the inactivity rate fell 0.2 percentage points to 21.3% in the quarter, a new record low. 

The small fall in the claimant count takes account of normal seasonal effects but adjusted figures are not published for local areas. The actual number of claimants, nationally, fell by 5,200 in the month to July, compared to the adjusted fall of 4,200 Therefore, it should not be surprising that figures for local areas will show slightly larger falls compared to the national picture. 

The proportion of people leaving Jobseeker’s Allowance (or the ‘leavers rate’) has fallen. At 16%, it is now well below the level in early 2015 of 18.8%. The number of new claims has fallen. Jobseeker’s Allowance off-flow rates for JSA claimants of short durations increased. Off-flow rates remain at historically high levels. We continue to comment on JSA statistics as they remain 60% of the claimant count. 

Youth unemployment is showing a quarterly fall. There are still 545,000 unemployed young people, and 359,000 (5.0% of the youth population) who are unemployed and not in full-time education. 

The proportion of unemployed young people (not counting students) who are not claiming Jobseeker’s Allowance or Universal Credit and therefore are not receiving official help with job search is now 55.2%. 

A total of 70,000 were counted as in employment while on ‘government employment and training programmes’. This number fell 26,000 this quarter to a record low. Self-employment rose 21,000 this quarter and is 15% of employment. Employee numbers rose 134,000 in the quarter. Involuntary part-time employment fell this quarter by 3,000 to 1.03 million, 12.3% of all part-time workers. The proportion remains nearly double that in 2004.The labour market figures published on 16 August show another strong increase in employment, with unemployment and economic inactivity amongst people of working age both falling. However, while the job prospects for individuals are encouraging, people in work are getting poorer with real wages again falling.


Duncan Melville, Chief Economist at Learning and Work Institute, commented: 

Employment growth in the three months to April to June 2017 was again strong and exceeded 100,000 for the fourth consecutive month. Unemployment and levels of inactivity amongst people of working age both fell. The working age employment and inactivity rates again reached record highs and lows respectively, and the unemployment rate fell to 4.4%, the lowest level for 42 years. 

Annual wage growth (regular pay excluding bonuses) was 2.1%, in the three months April to June 2017. However, this is below the current inflation rate and real wages declined, by half a percent, for the fourth month in a row. 

While the overall labour market continues to be strong, the impact of Brexit can be seen in a slowdown of employment growth amongst EU nationals in the UK. This growth in the year to June 2017 was 5.6% less than half the rate of growth seen a year ago, before the EU referendum. 

If as seems likely, and today’s figures appear to herald, workers from the EU become less of an option for UK employers then this reduction in labour and skills supply will need to be filled from domestic sources. With the labour market already as tight as it is, with high employment and low unemployment, this will be a challenge and this points to the heightened importance of effective skills and employment policies, including both lifelong learning so that individuals can update their skills in response to changing economic demands and the recruitment and retention of disabled people, where today's figures continue to show that less than 50% of disabled people are in employment.”

Employment rose by 125,000 between January to March 2017 and April to June 2017. In the last 12 months employment has grown by 338,000. 

Unemployment fell by 57,000 between January to March 2017 and April to June 2017. and the unemployment rate fell 0.2 percentage points to 4.4% in the quarter the lowest level since 1975. 

Economic inactivity fell by 64,000 between January to March 2017 and April to June 2017. and the inactivity rate fell 0.2 percentage points to 21.3% in the quarter, a new record low. 

The small fall in the claimant count takes account of normal seasonal effects but adjusted figures are not published for local areas. The actual number of claimants, nationally, fell by 5,200 in the month to July, compared to the adjusted fall of 4,200 Therefore, it should not be surprising that figures for local areas will show slightly larger falls compared to the national picture. 

The proportion of people leaving Jobseeker’s Allowance (or the ‘leavers rate’) has fallen. At 16%, it is now well below the level in early 2015 of 18.8%. The number of new claims has fallen. Jobseeker’s Allowance off-flow rates for JSA claimants of short durations increased. Off-flow rates remain at historically high levels. We continue to comment on JSA statistics as they remain 60% of the claimant count. 

Youth unemployment is showing a quarterly fall. There are still 545,000 unemployed young people, and 359,000 (5.0% of the youth population) who are unemployed and not in full-time education. 

The proportion of unemployed young people (not counting students) who are not claiming Jobseeker’s Allowance or Universal Credit and therefore are not receiving official help with job search is now 55.2%. 

A total of 70,000 were counted as in employment while on ‘government employment and training programmes’. This number fell 26,000 this quarter to a record low. Self-employment rose 21,000 this quarter and is 15% of employment. Employee numbers rose 134,000 in the quarter. Involuntary part-time employment fell this quarter by 3,000 to 1.03 million, 12.3% of all part-time workers. The proportion remains nearly double that in 2004.

Key Facts

  • Unemployment is 1,484,000, down by 11,000 from last month’s published figure (quarterly headline fell by 57,000) and the unemployment rate is 4.4%, down 0.1 percentage points on last month and down 0.2 percentage points on last quarter.
  • The number of claimant unemployed is 807,800, down 4,200 on last month, and the claimant rate is 2.3%.
  • The number of workless young people (not in employment, full-time education or training) is 958,000, down 7,000 on the quarter, representing 13.5% of the youth population (no quarterly change.
  • Youth unemployment (including students) is 545,000, down 17,000 on the quarter.
  • There are 1.9 unemployed people per vacancy. Learning and Work Institute estimates this figure may rise slightly next month.
  • The employment rate is 75.1% (up 0.2 percentage points on last month’s published figure and up 0.3 percentage points in the preferred quarterly measure).