Wage growth slows while unemployment rate remains record low

labour market figures june 2018

Women taking part-time jobs accounts for the biggest proportion of new jobs in the last year, according to new figures. This has boosted the female employment rate to a record high of 71.3%, says the Office for National Statistics (ONS), compared to 80% for men.

Overall, however, while the economy continues to create new jobs, wage growth in the UK has slowed.

The latest labour market report shows that average weekly earnings for employees in Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 2.8% excluding bonuses (that’s down from 2.9% a month ago and well below the five-year high of 3.1% seen in November) and by 2.5% including bonuses, compared with a year earlier. Total pay growth (including bonuses) also slowed, to 2.5% from 2.6%.

Unemployment rate

Despite the faltering wage growth, the unemployment rate remains at 4.2%, which is its lowest level in 43 years.

The ONS says:

  • There were 32.39 million people in work, 146,000 more than for November 2017 to January 2018 and 440,000 more than for a year earlier.
  • The employment rate (the proportion of people aged from 16 to 64 years who were in work) was 75.6%, higher than for a year earlier (74.8%) and the joint highest since comparable records began in 1971.
  • There were 1.42 million unemployed people (people not in work but seeking and available to work), 38,000 fewer than for November 2017 to January 2018 and 115,000 fewer than for a year earlier.

Comparing the estimates for employees and self-employed people for February to April 2018 with those for a year earlier:

  • employees increased by 473,000 to 27.42 million (84.7% of all people in work)
  • self-employed people increased by 9,000 to 4.81 million (14.9% of all people in work)

A mixed response

Senior ONS statistician David Freeman says: “Employment has continued to rise, while the unemployment rate remained at its lowest for over 40 years. Wages, both including and excluding bonuses, are continuing to increase, and slightly faster than inflation.”

Ian Brinkley, Acting Chief Economist at the CIPD, says: “It’s positive to see the labour market continuing to expand. However, there are signs of underlying weakness. Female part-time employment makes up more than a third of the annual increase in employment, which may suggest that employers are being forced to offer more flexible hours to attract more applicants against the backdrop of a tightening labour market and falling net migration.”

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