the november labour market update
TRANSCRIPT
LABOUR MARKET UPDATE
NOVEMBER 2015
LABOUR MARKET SEEMS IN GOOD HEALTH
After a wobbly patch earlier in the year, today’s data
shows a labour market which seems to be in rude health.
Employment has risen solidly due, in the main, to a rise in
the number of job opportunities offered by businesses.
Positively, the growth in employment benefited both men
and women.
The increase in employment was accompanied by a fall in
unemployment. Encouragingly, unemployment fell
amongst people who had been looking for work for only a
short space of time, but also amongst people who were
further away from the labour market e.g. the long-term
unemployed.
For those in work already however, the picture was a little
more mixed. Annual growth in regular pay eased back in
the private sector as a whole, although there was quite a
pronounced pick up in the construction sector, possibly
due to skills shortages. But that said, low inflation means
that pay packets are still stretching further at the till.
Employment growth has picked up...
Today’s labour market statistics show a rise in the
number of people in employment.
In the three months to September, the number of
people in work rose by 177,000 (Exhibit 1). This was
the strongest increase since the beginning of the year.
As a result, the employment rate for people aged 16 to
64 edged up to 73.7%.
As we reported last month, the vast majority of the
growth in employment was due to a rise in the number
of jobs offered by businesses (+146,000), as opposed
to an increase in the number of people working for
themselves (+38,000).
Over three quarters of the employee positions filled
were part-time. Similarly, the growth in self-
employment was mainly amongst people choosing to
work for themselves on a part-time basis.
...with both men and women benefiting
The increase in employment benefited both men and
women. Employment amongst men rose by 107,000 in
the three months to September while employment
amongst women ticked up by 69,000.
As a result, the male employment rate now stands at
78.5% and the female employment rate at 69.0%. And
while there is still a clear difference the employment
Headline figures Rate Number
(000s)
Change on quarter in 000s
(% change)
Change on year in 000s
(% change)
Employment* (ILO) 73.7% 31,211 177 (0.6%) 419 (1.4%)
Unemployment** (ILO) 5.3% 1,749 -103 (-5.5%) -210 (-10.7%)
Youth unemployment (16-24) 14.2% 653 -85 (-11.5%) -83 (-11.3%)
Source: ONS 2015, November labour market statistics, July to September 2015 data *Rate for those aged 16 -64 *Rate for those aged 16 and over
Exhibit 1 UK employment (000s)
Source: ONS 2015, November labour market statistics
29,400
29,900
30,400
30,900
31,400
Ju
l-S
ep
13
Se
p-N
ov 1
3
Nov-J
an
14
Ja
n-M
ar
14
Ma
r-M
ay 1
4
Ma
y-J
ul 1
4
Ju
l-S
ep
14
Se
p-N
ov 1
4
Nov-J
an
15
Ja
n-M
ar
15
Ma
r-M
ay 1
5
Ma
y-J
ul 1
5
Ju
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2
rate for men and women, encouragingly the female
employment rate has now reached an all time high.
The number of people out of work has fallen
Continuing the positive story, today’s data show that
unemployment fell.
In the three months to September, unemployment fell by
103,000, leaving 1.7 million people out of work and
looking for work (Exhibit 2).
As a result, the unemployment rate has now fallen back
to 5.3% which is only fractionally higher than just before
the crisis began (5.2%).
Encouragingly, and as we reported last month, the fall in
unemployment was seen amongst people who had been
out of work for both shorter and longer periods of time.
The number of short-term unemployed (unemployed for
up to six months) fell by 14,000 in the three months to
September.
The number of medium-term unemployed (over six
months and up to 12 months) declined by 27,000.
The number of long-term unemployed (over 12 months)
dropped by 62,000.
These changes mean that the short, medium, and long-
term unemployment rates are all just about back to
where they were just before the crisis began.
Prospects for young people improve too
Young people also fared well in the latest unemployment
statistics.
In the three months to September, the number of 16 to 24
year olds out of work and looking for work fell by 85,000.
Like the overall unemployment rate, the youth
unemployment rate, which has now fallen back to 14.2%,
is only a touch away from it’s pre-crisis level (14.0%).
The labour market is close to full employment
With employment up and unemployment down, we are
approaching full employment. Although there is no single
definition of full employment, at it’s most basic, it describes
a situation where everyone that wants to have a job can
find a job at the going wage rate, while allowing for
frictional unemployment - the period of time when workers
are transitioning from one job to another.
Whilst reaching full employment is a goal we should be
working towards, as we get closer, skills shortages are
starting to bite. Currently this is most notable in the
construction sector where some businesses are finding it
hard to recruit bricklayers, for example. This is one of the
reasons why annual pay growth in the construction sector
has leapt to 6.6%.
To help resolve this, the Government needs to ensure the
new apprenticeship levy delivers the right skills. We need
an independent levy board to set the rate and measure
standards if we are going to deliver large numbers of high
quality, business-relevant apprenticeships.
Employment rises in half of UK nations and regions...
Turning now to look at the local picture, rising employment
in over half of UK nations and regions was the driver
behind strong UK-wide employment growth.
Employment rose most sharply in the south east
(+45,000) and the north west (+40,000).
Other locations seeing strong employment growth
included the East of England (+27,000), the West
Midlands (+26,000) and London (+24,000).
Employment growth was more subdued, in the East
Midlands (+9,000) and the south west (+8,000) but
remained broadly unchanged in Scotland (+3,000),
Northern Ireland and the north east (both +2,000).
In contrast, employment actually fell in Yorkshire &
Humber (-4,000) and Wales (-6,000).
…while unemployment fell almost everywhere
Similar to the picture on employment, widespread falls in
unemployment across the UK’s nations and regions led to
a UK-wide decline in unemployment.
Unemployment fell most significantly in the south east
(-27,000) and the north west (-20,000).
Unemployment also fell fairly substantially in Yorkshire
& Humber (-17,000), the south west (-14,000),
Exhibit 2 UK unemployment (000s)
Source: ONS 2015, November labour market statistics
1,700
1,800
1,900
2,000
2,100
2,200
2,300
2,400
2,500
2,600
Ju
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13
Se
p-N
ov 1
3
Nov-J
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14
Ja
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ar
14
Ma
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ay 1
4
Ma
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ul 1
4
Ju
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ep
14
Se
p-N
ov 1
4
Nov-J
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Ma
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5
Ma
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3
the East of England (-13,000), the West Midlands and
London (both -10,000).
The East Midlands (-7,000) and Northern Ireland
(-5,000) also saw slight declines in unemployment.
In Wales (+3,000) unemployment was more or less the
same while in the north east (+6,000) and Scotland
(+11,000) unemployment crept up a little.
As Exhibit 3 shows, in areas like the East Midlands, the
north west and London, the unemployment rate is now
lower than before the crisis began.
That said, in some of these locations, like the north west,
there is scope for further progress as the unemployment
rate, at 5.5%, remains higher than the UK average (5.3%).
In other locations like the north east, Northern Ireland and
Scotland, unemployment remains elevated compared to
before the downturn. However, in other locations, like the
south west where this is also the case, we can be a bit
less concerned because, at 3.9%, the unemployment rate
is still well below the UK average.
Pay growth ticks down slightly
Although as we have described, more people have been
moving into work, the picture on pay is less rosy.
Annual growth in regular pay (excl. bonus) in the
private sector fell from 3.2% in the three months to
August to 2.8% in the three months to September
(Exhibit 4).
Similarly, across the economy as a whole annual
growth in regular pay fell from 2.8% to 2.5% over the
same time period.
Total pay (incl. bonus) growth held up better thanks to
a pick up in the pace of bonus pay growth. In the
private sector, annual growth in total pay stood at 3.4%
in the three months to September, down from 3.5% in
the three months to August.
Despite the weakening in regular and total pay growth,
real income growth has remained close to pre-crisis
levels thanks to rock-bottom inflation. Improving
productivity remains vital to achieving sustainable pay
growth going forwards.
The next labour market update will
be published on 16 December.
A CBI/Pertemps update will follow soon.
Exhibit 4 Annual growth in private sector regular pay (%)
Source: ONS 2015, November labour market statistics
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
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
Ju
n 1
5
Au
g 1
5
Exhibit 3 Unemployment rate compared to before the crisis
Source: contains Ordnance Survey data © Crown copyright and database right 2015 and ONS 2015, November 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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