News

Real wages and self-employment fall across UK as ‘employment engine begins to splutter’

15 Dec 2017 By Marianne Calnan

‘Boosting pay packets should be a priority for the government – not a side issue,’ says TUC

A squeeze in living standards is the reality for most workers in the UK, as the south east showed the highest – and Northern Ireland the lowest – employment rates in the last quarter. And across the country, average weekly earnings in real terms fell year on year, new figures have revealed.

This week’s UK labour market: December 2017 bulletin found that employees’ average weekly earnings in real terms, adjusted for price inflation, dropped 0.2 per cent including bonuses, and 0.4 per cent excluding bonuses, compared with last year.

Although average weekly earnings appear to increase by 2.5 per cent including bonuses when not adjusted for price inflation – and by 2.3 per cent excluding bonuses – compared with a year earlier, according to December’s Office for National Statistics update, this does not reflect economic reality.

High inflation has meant real wages have continued falling, said Ian Brinkley, acting chief economist at the CIPD. “The continued squeeze on living standards shows little sign of abating in the immediate future, though with inflation predicted to fall back towards 2 per cent later in 2018 there may be some light at the end of the tunnel,” he said.

Frances O’Grady, general secretary of the TUC, added: “Real wages have fallen for the last eight months in a row. And working people will be worse off than they were a decade ago. Boosting pay packets should be a priority for the government – not a side issue.”

A regional divide was also revealed. While the north east had the highest unemployment rate at 5.9 per cent, the lowest was in the south east, at 3 per cent for the three months ending October 2017.

There were 32.08 million people in work – 56,000 fewer than in May to July 2017 – but 325,000 more than the previous year. There were 1.43 million unemployed people seeking work, 26,000 fewer than for May to July 2017, and 182,000 down on a year earlier. The unemployment rate was 4 per cent, down from 5 per cent 12 months previously, and the joint lowest since 1975. But many have questioned whether this is accounted for by zero-hours contracts and short-term working.

Brinkley said the figures suggested that, in actual terms, the UK’s “employment engine has begun to splutter. The fall in the number of people in work is primarily driven by a fall in full-time self-employment. Coupled with a fall in unemployment, this appears to point towards constraints in supply of labour rather than a decline in demand.

“There is a strong possibility that the continued expansion of the labour market has hit its ceiling. In response, employers would be wise to invest more in their existing workforce.”

The Regional labour market statistics in the UK: December 2017 revealed that, in London, actual full-time weekly hours worked – which averaged 38.4 hours for the 12 months ending June 2017 – were the nation’s highest, whereas the highest level for part-timers was in Northern Ireland, with 16.9 hours. London topped the country with 33.7 average weekly hours worked in the same period, and the lowest was in Yorkshire and The Humber at 31.2.

But a shift emerged in the Midlands, as the largest rise in jobs was the West Midlands at 55,000, with the largest decrease in Yorkshire and The Humber at 36,000 between June and September 2017.

Richard Shea, managing director for Europe, the Middle East and Africa at Korn Ferry Futurestep, said the figures reflected the fact that the UK was at a “turning point where the employment boom seen in previous years is eroded” as older workers leave the workforce. “As companies begin to feel the effects of their most experienced staff leaving, this will put even more pressure on them to attract people with the skills required for the age of digital disruption.”

Shea said employers must ensure they have the “pulling power” to attract the best talent. “From flexible working and increased holiday allowance, to robust career development programmes and creative working environments, employers need to communicate their benefits,” he said.

“Having the right recruitment tools and technology in place will make the process efficient and more responsive to the expectations of prospective employees.”

HR Adviser

HR Adviser

Holborn and Covent Garden, London (Greater)

£35,850 to £40,975 per annum + excellent benefits

The National Housing Federation

HR Manager

HR Manager

Canterbury, Kent

Competitive Basic + Bonus

Automotive Company

HR Business Partner

HR Business Partner

Leeds, West Yorkshire

Salary circa £39,900 per annum

Leeds Trinity University

View More Jobs

Explore related articles