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UK – Growth in UK labour market but pay declines

13 August 2014

The latest estimates for April to June 2014, according to the Office of National Statistics, show that employment continued to rise and unemployment continued to fall. These changes continue the general direction of movement over the past two years.

During the three month period, there were 30.60 million people in work, 167,000 more than for January to March 2014 and 820,000 more than a year earlier.

The unemployment rate continued to fall, reaching 6.4% for April to June 2014, the lowest since late 2008. The unemployment rate is the proportion of the economically active population (those in work plus those seeking and available to work) who were unemployed.

The employment rate for those aged between 16 to 64 was 73.0%, up from 72.6% in the preceding three months. There were 2.08 million unemployed people, 132,000 fewer than for January to March 2014 and 437,000 fewer than a year earlier.

There were 8.86 million people aged from 16 to 64 who were out of work and not seeking or available to work (known as economically inactive). This was 15,000 more than for January to March 2014 but 130,000 fewer than a year earlier.

The economic inactivity rate was 21.9%. While this was unchanged compared with January to March 2014, the inactivity rate has shown a generally downward path since late 2011.

Pay including bonuses for employees in Great Britain was -0.2% lower than a year earlier. This was mainly due to an unusually high growth rate for April 2013 as some employers who usually paid bonuses in March paid them in April last year. Pay excluding bonuses for employees in Great Britain was 0.6% higher than a year earlier.

Commenting on the statistics released today, Mark Beatson, Chief Economist at CIPD, commented: "The number of people in work has increased by over 450,000 in six months and average hours worked have increased marginally, so this is not because work is being spread more thinly. About half of this growth has been in self-employment and this could mean that hours and earnings become more variable in future, as the self-employed tend to vary these rather than stopping (or starting) self-employment.  Unemployment continues to fall sharply and we are now seeing real progress in terms of reducing youth unemployment. The number of 16-24 year olds who are unemployed and not in full-time education fell by 135,000 in the last two quarters.

"The latest headline earnings growth figure is negative but this is probably a one-off - one of the ripples from changes to the top rate of income tax.  But if we look at the data excluding bonuses, average weekly earnings in June were the same as in December last year and up by only 0.8% on June last year.  This may be because labour productivity, measured by the value of output each of us produce per hour worked, has not increased in the first half of 2014 alongside strong employment growth in low-paid sectors such as restaurants and hotels, “ Beatson added.

To read the full report from the ONS, please click here 

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