Unemployment falls to 44-year low as the working week gets longer

Published on Jobs, Skills and Pay

The UK’s jobs market continued to defy economic uncertainty, with unemployment falling to a 44-year low and the number of hours worked increasing. However falling productivity suggests that the outlook for pay will remain subdued, the Resolution Foundation said today (Tuesday) in response to the latest labour market figures.

The UK’s jobs market remained strong in the three months to April. Employment increased by 99,000, while unemployment fell to 3.8 per cent, a rate not seen since the mid-1970s.

The number of hours worked across the economy rose faster than employment growth, up 1.1 per cent over the past year. When combined with weak economic growth this means that productivity actually fell last year. The Foundation notes that we’re now working over 32 hours a week on average, whereas if pre-crisis trends had continued we’d now be working fewer than 31 hours.

Real pay growth remained at 1.5 per cent – in line with pre-referendum growth, but well below the pre-crisis average of 2.2 per cent. The Foundation notes that with productivity falling for the third successive quarter, the UK’s medium term outlook for pay growth is subdued. This is a concern, notes the Foundation, given that real pay is still £8 week lower than it was before the financial crisis.

Stephen Clarke, Senior Economic Analyst at the Resolution Foundation, said:

“Britain’s job market continues to defy wider economic uncertainty, with unemployment falling to a 44-year low. People are also working more hours, reversing a long-standing pre-crisis trend towards a shorter working week. It’s likely that people are working more hours to compensate for lower pay.

“Real pay growth remained stable rather than strong at 1.5 per cent. However, Britain’s longer term prospects for strong pay growth remain muted as productivity continues to stagnate.”