Unemployment rates have dropped to the lowest point in 42 years, according to official statistics. The number of those out of the job aged 16 and over has dropped to 4.4%, the lowest since May 1975. Despite the drop in unemployment, the earnings of those in work still fell by 0.5%, according to the Office for National Statistics (ONS).
Average weekly earnings have increased by 2.1% year-on-year, a slight increase on last month but inflation has stood at 2.6%, meaning that real earnings are still falling behind. Employment figures have reached 75.1%, the highest since 1971, which is believed in part to be due to the rise in state pension age and people working for longer. The news comes as PA employment is expected to grow through 2017.
“The high levels of employment our flexible labour market generates remains a mainstay of the UK economy, and will be key to making a success of Brexit,” said Rachel Smith, CBI Principal Labour Market Economist. “However, pay growth is likely to be eroded by increasing inflation during this year, underlining the need for a regionally-focussed industrial strategy that powers the productivity growth that will enable wages to rise more swiftly.”
The value of the pound rose against both the dollar and euro following the news, reassuring many of some stability following the turbulent election this June. Recruiters will now be expected to do more to ensure they can both find and retain talent from a shrinking talent pool, especially as workforces look to get more out of their jobs.
“High employment often brings challenges for retention and hiring as the availability of skilled talent continues to shrink, further fuelling the war for talent,” said Phil Sheriden, Senior Managing Director at Robert Half. “Without consistently prioritising employee wellbeing and happiness, organsiations will lose out in the current labour market.”