Scottish Chambers of Commerce comment on Labour Market Figures
Tuesday 15 May
Labour market figures for the three months ending March 2018 has shown that the UK wide employment rate continues to be record breaking, reaching the highest level since records began, at 75.6%. Overall vacancies have reduced to 806,000, down 16,000 on the previous quarter but this remains higher than the same period a year ago.
Scotland’s employment rate increased by 0.3 percentage points over the same quarter to 74.7%, below the UK average. Unemployment has also decreased by 0.2 percentage points to 4.3%, sitting slightly above the UK average.
Real terms pay, adjusted for inflation, increased by 0.4%, but total pay, including bonuses, was flat. Both figures remain below the pre-downturn peaks observed in 2008.
Liz Cameron, Chief Executive, Scottish Chambers of Commerce said:
“The UK labour market continues to display resilience and growth, with a record high employment rate of 75.6%. Falling levels of economic inactivity and unemployment, both also at record lows, emphasise the continued positivity in this area.
“Although vacancies are higher than the same period last year, there has been a decrease in levels compared to the previous quarter. Nonetheless, the record levels of employment highlight the tightness of the labour market, and the challenges firms continue to face when seeking to recruit skilled staff.
“Total pay growth (including bonuses) continues to be disappointing in terms of overall rates of change – slowing from growth figures observed earlier in the year – lending credence to the Bank of England’s decision to hold interest rates at current levels. However, it remains positive to see that wage growth is currently outpacing inflation.
“Although the employment news is broadly positive, the subsequent increase in hours worked provided by this boost in jobs has had a knock-on effect on productivity. The ONS flash estimate of productivity released today, has shown a decrease of 0.5% in output per hour and output per worker, in contrast to quarterly increases in late 2017.
“Combined, these figures continue to highlight the consistent challenges the SCC Network has observed for businesses across the past few quarters, and which have been reflected in our own economic surveys. Businesses have continued to display high levels of recruitment difficulties, and despite an uptick in Q1 of 2018, levels of business investment must increase to recapture gains in productivity.
“Governments must also do more to provide the certainty firms need to face these challenges. Continued uncertainty surrounding Brexit, such as the final migration deal, and issues surrounding internal frameworks, must be resolved to minimise uncertainty. Figures released today have shown the first annual decrease in the UK’s total EU workforce since early 2010, and the largest year-on-year fall in EU8 nationals working in the UK since 1997. This further emphasises the challenge the UK faces in attracting talent from Europe and beyond, in an environment of increased uncertainty and global competition. Resolving these uncertainties will go a long way in providing confidence to the private sector and enable businesses to invest and tackle the challenges of the future.”