june 2015 - "employment drops and pay growth slows"
TRANSCRIPT
LABOUR MARKET UPDATE
AUGUST 2015
EMPLOYMENT DROPS AND PAY GROWTH SLOWS
Today’s labour market data painted a poorer picture than
we have seen in the recent past. The number of people in
employment fell while at the same time the number of
people out of work and looking for work rose.
Although this is clearly disappointing, it is unlikely to
signal the start of a significant deterioration in
employment prospects given the strength of economic
activity. Instead, it is more likely that the rate of
improvement in the jobs market is levelling off following a
period of solid jobs growth as the economy has continued
to recover from the downturn.
For those in work, the picture was also slightly less rosy.
Underlying growth in base pay in the private sector
slowed slightly. At the same time, the rate of growth in
bonus payments slowed significantly. This meant that the
pace of total pay growth also fell.
Fewer people are in work...
Today’s data shows that the number of people in
employment declined.
There were 63,000 fewer people in work in the three
months to June compared to the previous quarter
(Exhibit 1).
The decline in employment was driven by a fall in the
number of part-time employees (-66,000).
The number of people who were self-employed rose a
little (+8,000), slightly offsetting the fall in employees.
This comes against strong private sector jobs growth
over the past year. In fact, 485,000 additional people
found work with an employer over the past 12 months
while 95,000 fewer people were working for themselves.
...particularly amongst men...
Looking at the gender split, the decline in employment
was entirely due to more men moving out of work.
In the three months to June, the number of men in
employment fell by 71,000. This left the employment
rate amongst men at 65.1%
The number of women in work rose very slightly
(+8,000). As a result, the employment rate amongst
women stood at 54.7%. But, this is still well below the
employment rate amongst men.
Women doing better than men during the recovery is
not news. Throughout this period, it has been women
who have benefited most from the increasing
availability of job opportunities.
Headline figures Rate Number
(000s)
Change on quarter in 000s
(% change)
Change on year in 000s
(% change)
Employment* (ILO) 59.8% 31,035 -63 (-0.2%) 354 (1.2%)
Unemployment* (ILO) 5.6% 1,852 25 (1.4%) -221 (-10.7%)
Youth unemployment (16-24) 16.0% 738 3 (0.4%) -38 (-4.8%)
Source: ONS 2015, August labour market statistics, April to June 2015 data *Aged 16 and over
Exhibit 1 UK employment (000s)
Source: ONS 2015, August labour market statistics
29,400
29,900
30,400
30,900
31,400
Ap
r-Jun
13
Ju
n-A
ug
13
Au
g-O
ct 1
3
Oct-
De
c 1
3
Dec-F
eb
14
Fe
b-A
pr
14
Ap
r-Jun
14
Ju
n-A
ug
14
Au
g-O
ct 1
4
Oct-
De
c 1
4
Dec-F
eb
15
Fe
b-A
pr
15
Ap
r-Jun
15
2
...but this is unlikely to mark the start of a significant deterioration
While the fall in employment is clearly disappointing, the
picture is not quite as bad as it may seem at first glance.
This is because comparing today’s employment data for
the three months to June with data for the three months to
March, which was exceptionally strong, naturally makes
this latest data appear weaker.
In fact, single month employment estimates suggest that
the number of people in work in June was actually higher
than in May (+56,000).
So, today’s data is unlikely to mark the beginning of a
more dramatic deterioration in employment. Instead, the
data may suggest that, after a period of rising employment
following the crisis, the jobs market is levelling off. That
said, it is still too early to tell and we will continue to
monitor the situation in future months.
Overall unemployment creeps up...
Reflecting the fall in employment, latest labour market
data shows that unemployment has crept up.
As Exhibit 2 shows, in the three months to June the
number of people out of work and looking for work
increased by 25,000. This took the total number of
unemployed people to 1.85 million.
As a result, the unemployment rate edged up very
slightly to 5.6%, which was in line with the consensus
expectation.
Similar to last month, much of the rise in unemployment
has been due to an increase in short- and medium-term
unemployment.
The number of people unemployed for up to six months
increased by 17,000 in the three months to June.
Similarly, the number of people unemployed for six to 12
months increased by 21,000.
More positively, long-term unemployment continued to
decline. There were 13,000 fewer people long-term
unemployed (seeking work for over 12 months).
...but not amongst young people
Although unemployment edged up overall, for young
people the picture remained broadly unchanged.
There were 738,000 people aged 16-24 who were
unemployed in the three months to June.
This was very similar to the previous quarter (three
months to March) when 735,000 young people were out
of work and looking for work.
As a result, the youth unemployment rate, at 16.0%, is
also broadly similar to the previous quarter (Exhibit 3).
But, it is worth remembering that at 16.0%, the youth
unemployment rate is still much higher than before the
recession began (14%).
Fall in employment concentrated in three regions…
The fall in employment across the UK as a whole was
concentrated in three regions (Exhibit 4 overleaf).
The regions seeing the largest declines in employment
were the south east (-68,000), the north west (-38,000)
and the West Midlands (-27,000).
Employment also fell in the north east (-18,000),
Northern Ireland (-17,000), Scotland (-11,000) and
London (-4,000), but less significantly.
Exhibit 2 UK unemployment (000s)
Source: ONS 2013, August labour market statistics
1,700
1,800
1,900
2,000
2,100
2,200
2,300
2,400
2,500
2,600
Ap
r-Jun
13
Ju
n-A
ug
13
Au
g-O
ct 1
3
Oct-
De
c 1
3
Dec-F
eb
14
Fe
b-A
pr
14
Ap
r-Jun
14
Ju
n-A
ug
14
Au
g-O
ct 1
4
Oct-
De
c 1
4
Dec-F
eb
15
Fe
b-A
pr
15
Ap
r-Jun
15
Exhibit 3 UK youth unemployment rate (%)
Source: ONS 2013, August labour market statistics
12
14
16
18
20
22
24
Jun-
Aug
08
Feb
-Ap
r 09
Oct
-Dec
09
Jun-
Aug
10
Feb
-Ap
r 11
Oct
-Dec
11
Jun-
Aug
12
Feb
-Ap
r 13
Oct
-Dec
13
Jun-
Aug
14
Feb
-Ap
r 15
3
Elsewhere the story is more positive as the number of
people in work actually rose. These regions and nations
included the East of England (+7,000), Yorkshire and
Humber (+16,000), the East Midlands (+24,000), the
south west (+32,000) and Wales (+42,000).
…and so too was the rise in unemployment
The overall rise in unemployment was similarly felt most in
three of the UK’s nations and regions.
The overall rise in unemployment was felt most keenly in
London (+22,000), the south east and north west
(both +11,000).
Unemployment also rose, albeit to a lesser extent, in the
East of England (+9,000), the north east (+7,000) and
the south west (+5,000). In Northern Ireland (+1,000),
Yorkshire and Humber and the East Midlands (-3,000)
unemployment was broadly unchanged.
Encouragingly, a few regions and nations saw
unemployment fall. These were Wales (-9,000), the
West Midlands (-12,000) and Scotland (-13,000).
Pay growth falls, driven by bonus payments
Today’s data show that underlying base pay in the
private sector weakened slightly.
In the three months to June, annual growth in regular
pay (excl bonus) in the private sector stood at 3.3%,
compared to 3.4% in the three months to May
(Exhibit 5). Across the economy as a whole regular
pay was unchanged at 2.8%.
Annual growth in total pay (incl bonus) in the private
sector fell more substantially, from 3.9% in the three
months to May to 2.8% in the three months to June.
The picture was similar looking at the whole economy,
with total pay growth dropping from 3.2% to 2.4%.
The driving factor behind the dip in total pay growth
was a fall in bonus pay. In the private sector this fell
from 5.0% to -4.1% over the same period.
The next labour market update will
be published on 16 September.
A CBI/Pertemps update will follow soon.
Exhibit 5 Annual growth in private sector regular pay (%)
Source: ONS 2015, August labour market statistics
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Ju
l 13
Se
p 1
3
Nov 1
3
Ja
n 1
4
Ma
r 1
4
Ma
y 1
4
Ju
l 14
Se
p 1
4
Nov 1
4
Ja
n 1
5
Ma
r 1
5
Exhibit 4 Quarterly change in employment
Source: contains Ordnance Survey data © Crown copyright and database right 2015 and ONS 2015, August labour market statistics
4
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