june labour market update
TRANSCRIPT
LABOUR MARKET UPDATE
JUNE 2015
PRIVATE SECTOR FORGING AHEAD, CREATING JOBS AND INCREASING PAY
Supported by
Today’s labour market statistics reflect the good health of
the economy. Employment has increased again thanks
to private sector businesses offering more and more
permanent, full-time job opportunities.
Unemployment has continued to fall as those who have
been out of work for the longest periods of time move
back into employment. Positively, the number of young
people not in education or employment has also fallen.
The news is good for those in work too. The pace of wage
growth in the private sector has risen once again and is
now at its highest rate since the final quarter of 2008,
just after the recession began. However, to ensure
sustainable higher pay growth, we will need to see
improvements in productivity.
More people find work with an employer...
The latest labour market statistics show that the number
of people in employment continues to rise.
In the three months to April, 114,000 more people
moved into work. The employment rate now stands
at 59.9% for those aged 16 and over.
Reflecting recent trends, the rise in employment was
driven by growth in the number of people working as
employees (+169,000). Positively, employers were able
to offer seven out of ten employees a full-time role.
This increase in the number of employees more than
offset a fall in self-employment (-54,000).
Encouragingly, the rise in employment was driven by
the private sector. In the three months to April, 124,000
more people found work with a privately run firm while
employment in the public sector fell (-10,000).
The private sector now accounts for 83% of total
employment.
The sectors propelling jobs growth forward in the three
months to March were: professional, scientific and
technical activities (+78,000); wholesale and retail
(+55,000); and manufacturing (+34,000) (Exhibit 1).
...and unemployment continues to fall
Reflecting the rise in employment, unemployment across
the UK has fallen. In the three months to April, the
number of people out of work decreased by 43,000. This
means the unemployment rate is now at 5.5%, creeping
down towards its pre-crisis level (5.2%).
Headline figures Rate Number
(000s)
Change on quarter in 000s
(% change)
Change on year in 000s
(% change)
Employment* (ILO) 59.9% 31,053 114 (0.4%) 424 (1.4%)
Unemployment* (ILO) 5.5% 1,813 -43 (-2.3%) -349 (-16.1%)
Youth unemployment (16-24) 16.1% 740 -2 (-0.3%) -115 (-13.5%)
Source: ONS 2015, June labour market statistics, February to April 2015 data *Aged 16 and over
Exhibit 1 Change in jobs (Q4 2014 - Q1 2015, 000s)
Source: ONS 2015, June labour market statistics
-40 -30 -20 -10 - 10 20 30 40 50 60 70 80
Transport & storage
Agri, forestry & fishing
Human health & social work
Real estate activities
Education
Manufacturing
Wholesale & retail trade
Prof, scientific & technical
2
Looking at the unemployment figures in more detail:
The fall in unemployment was caused by a decline in the
number of people out of work for over a year (-55,000).
In contrast, there was actually a rise in the number of
people out of work for six to 12 months (+11,000).
Short-term employment (those out of work for less than
six months) remained broadly unchanged (+1,000).
As Exhibit 2 shows, short and medium-term
unemployment is now back down to pre-recession levels.
Because of this, it may be that future reductions in the
overall unemployment rate are driven by further declines
in long-term unemployment. We will keep an eye on future
labour market data to see what happens.
Youth unemployment is broadly unchanged
The number of 16-24 year-olds out of work and looking for
work remained more or less unchanged in the three
months to April (-2,000). As a result, the youth
unemployment rate was broadly unchanged, at 16.1%.
However, the headline data masks the different
experiences of different groups of young people:
There was a healthy decline in the number of young
people not in employment or education (-21,000). The
unemployment rate amongst this group is now 13.7%,
only slightly above its pre-recession rate (13.1%).
This decline was offset by an increase in the number of
young people in education, but still seeking part-time
work (+19,000). The unemployment rate amongst this
cohort (23.3%), is still well above its pre-crisis rate
(16.7%).
More older people in the workforce
Young people are not the only group it is interesting to
look at in more detail. Here we look at changes in the
number of older people in employment.
During the 1990s, the share of those in work aged 65 and
over was relatively stable, fluctuating between 1.5% and
2%. Since the early 2000s however, this proportion has
been rising. The latest data shows that this group now
accounts for 3.8% of those in employment (Exhibit 3).
Reasons for this include financial pressures, a higher state
pension age, people with longer life expectancies choosing
to remain active for longer and the abolition of the default
retirement age.
The sectors in which those aged 65 and above tend to
work in are: public administration, education and health
care (36%); distribution, hotels and restaurants (19%); and
banking, finance and insurance (15%). Not surprisingly,
older workers are more likely to work part-time or have
flexible working arrangements.*
* Older Workers Statistical Information Booklet 2013: ONS
Employment increases in two thirds of regions and nations...
Turning now to look at the UK’s nations and regions,
reflecting the experience across the UK as a whole, the
majority of areas saw the number of people in work tick up.
Southern regions outside London led the way on
employment growth in the three months to April, with the
south west (+42,000) and south east (+36,000) seeing
the largest increases. The East of England (+26,000)
and north west (24,000) also saw strong employment
growth.
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
Ma
r-M
ay 9
2
Jul-S
ep 9
3
Nov-J
an
95
Ma
r-M
ay 9
6
Jul-S
ep 9
7
Nov-J
an
99
Ma
r-M
ay 0
0
Jul-S
ep 0
1
Nov-J
an
03
Ma
r-M
ay 0
4
Jul-S
ep 0
5
Nov-J
an
07
Ma
r-M
ay 0
8
Jul-S
ep 0
9
Nov-J
an
11
Ma
r-M
ay 1
2
Jul-S
ep 1
3
Nov-J
an
15
Exhibit 3 Share of those in work aged 65 and over (%)
Source: ONS 2013, June labour market statistics
Exhibit 2 UK unemployment rate by duration (%)
Source: ONS 2015, June labour market statistics
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Jan-M
ar 08
Jul-S
ep 0
8
Jan-M
ar 09
Jul-S
ep 0
9
Jan-M
ar 10
Jul-S
ep 1
0
Jan-M
ar 11
Jul-S
ep 1
1
Jan-M
ar 12
Jul-S
ep 1
2
Jan-M
ar 13
Jul-S
ep 1
3
Jan-M
ar 14
Jul-S
ep 1
4
Jan-M
ar 15
Up to 6 months Over 6 and up to 12 months
Over 12 months
3
Other areas seeing employment rise were Scotland
(+14,000), Northern Ireland (+12,000), Wales (+9,000)
and the East Midlands (+6,000).
In the West Midlands (-1,000) and north east (-3,000)
employment remained more or less unchanged.
Only two areas saw the number of people in work fall.
These were Yorkshire and Humber (-14,000) and
London (-39,000).
...and these areas tend to see unemployment fall too
Those nations and regions that saw the strongest
employment growth typically saw unemployment decline
too (Exhibit 4).
In the three months to April, the East of England
(-22,000), south east (-20,000) and north west (-16,000)
saw the most significant falls in unemployment.
Unemployment also fell, although by less, in the south
west, West Midlands and north east (all -5,000).
In the East Midlands (-2,000), Scotland (+1,000),
Northern Ireland, London (both +2,000) and Wales
(+3,000) unemployment remained broadly similar.
The only region to see unemployment rise was
Yorkshire and Humber (+24,000).
Private sector pay growth picks up further
Today’s data shows that wage growth has risen further,
thanks to the private sector (Exhibit 5).
Annual growth in regular pay (which excludes bonuses)
in the private sector sped up from 2.8% in the three
months to March to 3.2% in the three months to April.
Looking at total pay (which captures bonus payments),
we see a similar story with pay growth accelerating
from 2.8% to 3.3% over the same time period.
This healthy pay growth, set alongside rock bottom
inflation (annual CPI inflation over the same period was
0.0%), is further evidence that the wage squeeze has
eased.
That said, to deliver sustainable higher wage growth, we
need to see productivity rise. This means investing in
skills and government support for innovation and
investment in next month’s budget.
The next labour market update will
be published on 15 July.
A CBI/Pertemps update will follow soon.
Exhibit 5 Annual growth in private sector regular pay (%)
Source: ONS 2015, June labour market statistics
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Ju
n 1
3
Au
g 1
3
Oct
13
Dec 1
3
Fe
b 1
4
Ap
r 1
4
Ju
n 1
4
Au
g 1
4
Oct
14
Dec 1
4
Fe
b 1
5
Ap
r 1
5
Exhibit 4 Quarterly change in unemployment (000s)
Source: contains Ordnance Survey data © Crown copyright and database right 2015 and ONS 2015, June labour market statistics
4
For further information or a copy in large text format, please contact:
Rachel Smith Senior labour market policy economist,
CBI T: 44 (0)20 7395 8233
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