Number of ‘economically inactive’ people in UK at lowest rate for 24 years

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The Office for National Statistics (ONS) released their Labour Market Statistics for April. Key points were:

  • Latest estimates for December 2013 to February 2014 show that employment continued to increase, unemployment continued to fall, as did the number of economically inactive people aged from 16 to 64. These changes continue the general direction of movement over the past two years.
  • At 2.24 million for December 2013 to February 2014, unemployment was 77,000 lower than for September to November 2013 and 320,000 lower than a year earlier.
  • The unemployment rate was 6.9% of the labour force (those unemployed plus those employed) for December 2013 to February 2014, down from 7.1% for September to November 2013 and from 7.9% for a year earlier.
  • At 30.39 million for December 2013 to February 2014, employment was 239,000 higher than for September to November 2013 and 691,000 higher than a year earlier.
  • 72.6% of people aged 16 to 64 were in work for December 2013 to February 2014, up from 72.1% for September to November 2013 and from 71.4% for a year earlier.
  • 8.85 million people aged 16 to 64 were economically inactive (those out of work but not seeking or available to work) for December 2013 to February 2014. This was 86,000 lower than for September to November 2013 and 104,000 lower than a year earlier.
  • 21.9% of people aged 16 to 64 were economically inactive for December 2013 to February 2014, down from 22.2% from both September to November 2013 and from a year earlier. The rate has not been lower since October to December 1990.
  • Pay including bonuses for employees in Great Britain for December 2013 to February 2014 was 1.7% higher than a year earlier, with pay excluding bonuses 1.4% higher.

Average weekly earnings

The average weekly wage, including bonus payments, rose by 1.7% comparing December 2013 to February 2014 with the same period a year earlier. Average weekly wages including bonus payments before taxes and other deductions from gross pay were £479 in February 2014, up from £470 a year earlier.

Average weekly earnings for the private sector increased by 2.0% and average weekly earnings for the public sector increased by 0.9%.

In February 2014 average pay including bonus payments in the private sector was £474 a week, £20 a week lower than the public sector figure of £494 a week. However, excluding publicly owned financial corporations, average weekly pay in the public sector was only £8 a week higher than for the private sector, at £482 a week.

Employment up 239,000 compared with the previous quarter

Comparing December 2013 to February  2014 with the previous three months, the number of people in employment increased by 239,000 (to reach 30.39 million), the number of unemployed people fell by 77,000 (to reach 2.24 million) and the number of people not in the labour force (economically inactive) aged from 16 to 64 fell by 86,000 (to reach 8.85 million).

Nigel Meager, Director of the Institute for Employment Studies, comments on the ONS Labour Market Statistics: “Coming as they do after more than 6 months of improving data, they confirm that the labour market recovery from the recession is now firmly entrenched.

“All the main labour market indicators have moved in the right direction compared with the previous quarter, in some cases by significant amounts. In particular, the overall employment rate, at 72.6 per cent (a much better measure than the total employment number, usually cited by ministers) is now back at the level last seen at the start of the economic crisis.

“Much of the recent growth has been in full-time employment, and, among part-timers, the numbers working part-time because they can’t find a full-time job is starting to inch down. The unemployment rate has fallen below 7 per cent for the first time since late 2009. Long-term unemployment is also down, suggesting that the recovery is starting to benefit those groups furthest from the labour market.The fall in the youth unemployment rate is also to be welcomed, although it needs to be stressed that the strongest growth in employment is yet again among older workers (aged 50-plus).

“The level of vacancies in the economy is strongly up, an indication of further pent-up demand from employers. The much lamented squeeze on real wages seems to be easing, with the gap between earnings growth and price inflation having almost closed, although it will take many months or years of earnings growth for the lost ground to be recovered.

“There are, however, some unusual features of the labour market recovery, which are yet to be fully explained. In particular, the ongoing surge in self-employment continues apace. It is up by another 146,000 in the quarter to a new record of over 4.5 million. Over the last two years the number of employees grew by 3 per cent, but the number of self-employed by a dramatic 9 per cent. Key questions surround whether this reflects a wave of new business creation, or whether, as some have suggested, it mainly consists of a motley collection freelancers aiming to keep a toehold in the labour market until they are able to return to regular employment. Most likely it is a mixture of both, but one notable feature of the recent self-employment growth has been the extent to which it consists of people working part-time (traditionally, the self-employed have tended to work much longer hours than employees). It is also worth noting that the self-employed are not included in the average earnings statistics published today, and some recent analysis of self-employed incomes suggests that they have fallen even more in the recession than those of employees.”

With the news released by the ONS showing that self-employment has topped 4.5 million for the first time in history. Simon McVicker, Director of Policy & Public Affairs at PCG said: “Every time the ONS releases new figures on the labour market, we see that the number of people in business on their own account has gone up significantly. I’d like to know how large that figure has to get before Britain’s self-employed people are given the backing they deserve.”

“It is crucial that our outdated taxation system is urgently reformed, allowing the self-employed to spend less time dealing with red tape and more time driving growth in the UK economy.”

Andrew Hunter, co-founder of Adzuna, commented: “This is the moment British workers have been waiting for. Today the balance of wages and inflation has tipped in favour of workers for the first time since April 2010. And the good news doesn’t end there. Unemployment has fallen to a five-year low, which will help to oil the wheels of the wage recovery further. As skilled-workers become harder to source, employers will have to increase salaries in order to attract top talent. The jobs market is moving from rescue to recovery with increasing pace.”

Neil Carberry, CBI Director for Employment and Skills, said: “This is a positive set of figures which shows again that our flexible jobs market works. Firms are hiring at a faster pace, the number of people out of work is at a five-year low and the majority of new jobs are full-time.

“We’ve always said that as growth picks up more people will feel the benefits. Businesses are creating jobs across all sectors and real wages in the private sector are rising.”

David Morel, managing director of London-based Tiger Recruitmentcomments:
“The recovery of the economy is now very real. While wage growth, excluding bonuses, remains below inflation, achievable salaries are improving by the day.

“Pay will continue to increase throughout 2014 due to increased competition among employers and greater confidence among those seeking a job. Good quality job applicants can now secure a decent pay package and their bargaining position is strengthening by the day. Slowly but surely we’re moving into a candidate’s market.

“2014, to date, has been exceptionally busy. Not only are more people looking for jobs, as they feel more confident about their prospects, but more companies are hiring. This is happening across all sectors of the market.

Graduates are also a lot more active now and it’s becoming easier to get a job even for them. Despite some findings to the contrary, I would also argue that graduate salaries have improved. Things are finally picking up for those starting out on their careers.”


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