A 100,000 increase in employment means Britain has returned to its record high employment rate, but the labour market looks increasingly volatile as employment growth oscillates month by month and pay continues to fall despite a record level of unfilled job vacancies, the Resolution Foundation said today in response to today’s labour market statistics.
The data indicates good news for productivity, with hours worked remaining flat despite higher employment. The quarterly productivity growth rate reported in Q3 was, at 0.9 per cent, the highest recorded since 2011. RF analysis of today’s figures imply quarterly growth will rise again in Q4, to roughly 1 per cent. Even after accounting for disastrous productivity figures for early 2017, this would mean annual productivity growth to the end of 2017 of 1.3 per cent. This would be the strongest full year productivity growth since 2007, but still well below pre-crisis average growth of 2.3 per cent a year.
The Foundation also notes that while earnings were still falling -0.5 per cent in real terms in November, the pay squeeze is now likely to start easing with the RF pay prediction indicating pay growth of between -0.4 and -0.3 for December, and between -0.5 and -0.1 in January.
Stephen Clarke, Policy Analyst at the Resolution Foundation, said:
“This month brings triumphant news on employment, which returned to its joint highest rate since records began. Full time employees continue to dominate job creation, accounting for 97 per cent of the growth. By contrast self-employment is now flat or even falling.
“Under the lid though, there is evidence that employment has become more volatile as businesses wrestle with uncertainty and a tighter labour market. Recent monthly figures have seen something of a rollercoaster in the employment rate. Particularly strong November figures driving today’s welcome overall change, while we know that private sector employment actually fell slightly between June and September.
“This volatility sits against a backdrop of a record 800,000 unfilled jobs, with the vacancy to employment ratio at an all-time high. The hospitality sector is struggling the most, with 4.5 unfilled vacancies for every 100 jobs. Time will tell if this pushes unemployment down further.
“It’s crucial that amidst this welcome news on employment and an apparent boost to productivity growth we don’t forget the snails-pace pay recovery. While the squeeze is likely to ease in the coming months, we’re still £15 below the 2008 peak for average weekly earnings. The spectre of a decade of lost earnings growth still remains.”