Jobs cheer for the Chancellor presents headache for Home Secretary as official figures show modest fall in basic pay

Non-UK nationals make up almost three quarters of the annual increase in employment.

Commenting on today’s ONS Labour Market Statistics, Gerwyn Davies, Labour Market Adviser at the CIPD, the professional body for HR and people development, says:

“Today’s jobs figures, showing further increases in the number of people in work and equally sharp falls in the claimant count, will cheer the Chancellor of the Exchequer ahead of his Autumn Statement later this month. In addition, signs that wage pressure is moderating against the backdrop of historically low levels of inflation strengthens the case for the Bank of England not raising interest rates in the next few months, despite unemployment falling to a seven-year low.

“Harsh critics might point out that a relatively large proportion of the jobs are part-time. However this follows a period of strong growth in full-time employment. Against the backdrop of its net migration target and the EU debate, the only potential worry for the government perversely is the sharp increase in the number of non-UK nationals in employment. The increase is driven by non-UK nationals from the EU that now make up 2 million of the UK workforce for the first time.

“However, it is important to recognise that migrant workers are a key part of the UK’s flexible labour market, [link]CIPD research published this week shows that employers have headed off the threat from skills shortages by by turning to migrant workers, as well as hiring more young people and upskilling the existing workforce. This may explain why pay pressures have not increased, which has supported stronger employment growth and eased any pressure on the Bank of England to raise interest rates at a time when the global economy is showing signs of cooling down. Even though pay pressures have eased, the rate of earnings growth comfortably exceeds price inflation, although there is still plenty of ground to be made up after several years of earnings going up by less than prices.”

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