UK employment rises regardless of Brexit

The UK jobs market continued to shrug off the effects of Brexit as employers added an extra 179,000 staff between December and February, taking the number of people in work to a record high.

Employment hit 32.7 million during the latest quarter, the highest level since records began in 1971.

Unemployment kept at 3.9 per cent, its lowest level since 1975, the Office for National Statistics (ONS) said.

Wages grew 3.4 per cent, indicating that political turmoil surrounding Britain’s departure from the EU has not yet severely dented the jobs market or earnings.

However, after adjusting for inflation wages rose a more modest 1.5 per cent, leaving real average earnings languishing below their peak reached more than a decade ago.

Total pay, including bonuses, now averages £494 a week, compared with £525 in February 2008, as the financial crisis began to deepen.

Thomas Pugh, UK economist at Capital Economics warned that worse news could be in store for the jobs market.

“We suspect that this could mark the peak of employment growth as the Brexit uncertainty reached its crescendo … And the surveys turned down sharply in March.”

But so far, the jobs market has held up better than expected. The number of people unemployed fell 79,000 between December 2018 and February 2019 from a year earlier, taking the jobless figure to 1.34 million.

Economic inactivity – which covers people who aren’t in work but are not classified as unemployed because they aren’t looking for one – fell to 20.7 per cent, its lowest level since comparable records began almost five decades ago.

This was partly driven by a long-term trend that has seen more women entering the labour market.

Tej Parikh, senior economist at the Institute of Directors, said that Brexit may have actually helped to create jobs, at least in the short term. A prolonged period of uncertainty had prompted companies to hire staff rather than invest in training, technology and new machinery, he said.

“Without a pick-up in investment, low productivity will also keep wages from growing further, particularly when considering the higher regulatory costs businesses are facing this tax year.

“High employment should not lull policymakers into a false sense of security, business leaders need clarity on Brexit and faster progress on the government’s skills and productivity agenda.”

TNT Business

Photo Credit: Paul Gillet

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