‘Sharpest rise’ in UK unemployment in five years as economy tightens, official stats show

21 Feb 2018 By Marianne Calnan

Jobs market ‘hangs in the balance’ as Brexit looms, says expert

UK unemployment levels rose in the last quarter, with 1.47 million unemployed people not in work but seeking and available – 46,000 more than for July to September 2017, but 123,000 fewer than for a year earlier, according to official figures published today (21 February).

Unemployment reached 4.4 per cent in the final quarter of 2017,  0.1 per cent higher than the previous quarter, the Office for National Statistics’ (ONS) latest statistical bulletin, UK labour market statistics: February 2018 and Labour market economic commentary: February 2018 revealed.

Between July to September 2017 and October to December 2017, the number of people in work and the number of unemployed people both increased.

The number of people aged from 16 to 64 not working and not seeking or available to work fell. That age group in employment in 2017’s final quarter increased to 75.2 per cent to reach 32.15 million. At the same point of 2016, the figure was just shy of three-quarters at 74.6 per cent, estimates from the Labour Force Survey show.

Matt Hughes, ONS’ senior statistician, described this as the “sharpest increase in unemployment in almost five years, the number of people in work has continued to rise and there are fewer ‘economically inactive’ people – those neither working nor looking for a job.”

He said this increase was largely driven by UK nationals. “In particular, there were fewer citizens of the eastern European countries that joined the EU in 2004 and of non-EU countries were in work than in the year before.”

The UK saw 4,390 fewer citizens of Cyprus, Croatia and Malta, and 9,472 fewer people from Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovak Republic and Slovenia working here in 2017, compared to 2016. 

However, there were also 64,476 more employees from Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain and Sweden in 2017 compared to 2016, and 77,545 more from countries such as Romania and Bulgaria. 

“But it’s important to remember these figures simply look at the number of people in work, and aren’t a measure of migration,” Hughes added.

The shortage of suitable qualified candidates for jobs contributed to employer confidence dropping to its lowest level since the EU referendum, a report published on 31 January found.

Doug Monro, co-founder of Adzuna, said that as Brexit looms, the “future of the jobs market hangs in the balance.” 

Jobless women have also played a part in increased levels of unemployment. 

Young women between 16 and 24 without a job rose by 21,000 in the final quarter of 2017 compared to the previous quarter. This is the highest level of female unemployment since between June and August 2016.

Young Women’s Trust chief executive Dr Carole Easton OBE, said this should be seen as “warning sign” and called for “more to be done improve young people’s prospects.”

Easton suggested giving suitable “skills and support” to find jobs, ensuring decent and flexible jobs are available, and extended the national living wage to under-25s. 

“This will not only help them to become financially independent but will benefit businesses and the economy too,” she said.

Ian Brinkley, the CIPD’s acting chief economist said "the substantial and unexpected rise in unemployment is a clear warning that the UK labour market may be running out of steam”. 

He added there were reasons to believe that this was “a one-off, as opposed to the beginning of a larger employment crisis” with some of the rise in unemployment potentially attributable to more students entering the labour market.

While average weekly pay excluding bonuses in 2017 was £481 prior to tax and deductions rose £12 per week compared to 2016, the increase slightly larger when bonuses were included, total pay, including bonuses was £512 per week before tax and other deductions, up from £498 per week for a year earlier. 

Between October to December 2016 and October to December 2017, in nominal terms, regular pay increased 2.5 per cent, 2 per cent more than between September to November 2016 and September to November 2017. While total pay remained unchanged at 2.5 per cent, when adjusted for consumer price inflation, regular pay and total pay actually fell 0.3 per cent. 

Laith Khalaf, senior analyst, at Hargreaves Lansdown said the growth was “hardly jaw-dropping”, and emphasised that it means “the consumer squeeze is still alive and well.”

Crowley Woodford, employment partner at law firm Ashurst said that "although average earnings have slightly increased it is clear that overall the squeeze on worker pay persists. 

“Employers continue to lack confidence in the longer term future, whilst feelings of job insecurity remains amongst workers. This dampens the pressure on employers to offer higher pay and employee representative bodies to demand it."

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