The UK unemployment rate has fallen to a seven-year low of 5.3% in the three months to September, new figures from the Office for National Statistics (ONS) show. The ONS said this was the lowest jobless rate since the second quarter of 2008. The number of people out of work fell by 103,000 between July and September to 1.75m. There were 31.21m people in work, 177,000 more than for the April-to-June quarter and 419,000 more than in the same period a year earlier.
ONS statistician Nick Palmer said: “These figures continue the recent strengthening trend in the labour market, with a new record high in the employment rate and the unemployment rate still at its lowest level since spring 2008.” The ONS also said the total earnings of workers, including bonuses, in the three months to September were up 3% from a year earlier, the same rate as in the three months to August.
In September, total wages rose by 2.0%, down from 3.2% the previous month and the weakest increase since February. Excluding bonuses, average weekly earnings growth slowed to 2.5% in the third quarter and 1.9% in September, both the weakest since the first quarter of 2015.
Chris Williamson, chief economist at research firm Markit, said: “The UK labour market continued to tighten in September, as unemployment fell more than expected and employment rose sharply. Pay growth remained surprisingly weak, however, despite further evidence of growing skill shortages, which normally leads to higher salaries.
“Pay growth remains central to policymaking, and interest rates are likely to stay on hold for as the official data show pay growth remaining subdued. Today’s data therefore support the Bank’s current projections that there will be no need to raise interest rates until 2017 due to persistent low inflation.”
The latest Labour Market Outlook from the CIPD, the professional body for HR and people development, suggests that wage inflation is unlikely to take off in the next year due to limited skills shortages and subdued pay settlement forecasts from employers.
The quarterly survey of more than 1,000 employers shows that across all sectors just 15% of current job vacancies are proving difficult to fill. It also reveals that, outside a limited number of industries, UK employers continue to be able to recruit the workers they need without significantly hiking wages and that median basic pay rises of just 2% are predicted by employers in the 12 months to September 2016.
The Labour Market Outlook finds that the number of applicants per vacancy has remained steady over the past year, with average applications for jobs running at 25 for each low-skilled role, 15 for medium-skilled roles and 8 for highly-skilled roles. This suggests that in general, most businesses are seeing a steady flow of suitable candidates, despite unemployment falling to a seven-year low in October and despite a slight year on year increase (44%-49%) in the number of employers reporting any hard to fill vacancies.
The most common employer response to hard-to-fill vacancies are up-skilling existing staff (48%), followed by hiring more apprentices (27%), recruiting migrant workers (23%) and raising starting salaries for hard to fill positions (22%).
Across all organisations reporting any job vacancies, the proportion of hard-to-fill vacancies is only modestly higher in the private sector (16%) than the public sector (11%).
Focusing on organisations reporting recruitment difficulties, the proportion of hard-to-fill vacancies is greatest in the manufacturing and production sector (24%), which includes industries such as construction and utilities, and private sector services (24%), which covers industries such as finance and retail.
Over half (54%) of UK businesses feel that retention will become as a big a challenge for businesses as recruitment over the next ten years, according to recruitment firm Capita Resourcing. Nearly three-quarters (73%) also think employees are becoming more demanding and aware of their skills.
The Workforce Horizons study combines a survey of 200 HR professionals with in-depth interviews of 10 leading HR experts. It found that 94% believed that it is important to engage with the very best talent even before a position is available to them. The results signal a subtle but significant power shift from employer to employee, which is only set to accelerate even further over the next decade.
Most organisations are falling behind employees in realising the importance of a brand, with only 18% of those surveyed having developed an employer brand. Fewer still (11%) have commenced training to develop their value proposition for the employer brand.
The survey also found that 92% of HR professionals believe employment flexibility (to include a wide mix of ‘total reward’ elements such as working from home or part-time) will become the most important factor for employees in determining the suitability of a future employer. Only 8% of the workforce, however, currently work on a flexible contract meaning a significant shift needs to occur to meet demand.
The latest official snapshot of the UK labour market published on Wednesday and covering June to August showed a 79,000 decline in unemployment to 1.77m, taking the jobless rate to 5.4%, the lowest since 2008. The employment rate, at 73.6%, was the highest since records began in 1971.
George Osborne, The Chancellor, said: “It is great news that Britain’s economic plan continues to create jobs and increase pay. We’ve got the highest rate of employment in our history and real terms pay is rising strongly.”
Average pay, including bonuses, increased at an annual rate of 3%, the Office for National Statistics (ONS) said. John Philpott, of the Jobs Economist consultancy, said the improvement in the labour market evident in the latest figures contrasted with the earlier months of 2015, when there was evidence that firms’ appetite for hiring was waning.
“The explanation for the flip in behaviour is unclear, though it’s possible that recruiters were cautious in the first half of the year because of political uncertainty surrounding the general election in May. What is clear is that hiring picked up strongly from June onwards,” he said.
Nick Palmer, an ONS labour market statistician, commenting on the data, said: “Today’s fall in unemployment has more than outstripped the recent rises, leaving unemployment at its lowest level since mid-2008.”
PwC has taken the number one spot in The Times Top 100 graduate employers with Aldi and Google following in second and third place. Head of student recruitment at top employer PwC, Richard Irwin, praised students for their high opinion of the firm, despite there being a ‘significant change’ in the graduate job market over the past decade.
Mary Dunn, Communications Director at Aldi, expressed her delight at the ranking, having risen from fourth place last year. She said: “It’s also notable that Aldi has remained within the top ten of the rankings for the past nine years, as well as being the number one graduate employer for general management roles during this time, highlighting the consistent recognition which we receive from students and universities alike.”
When combined together, the top 100 list is offering 22,300 graduate vacancies in 2016 – up 9.6% on last year, meaning entry-level jobs at the UK’s leading employers have increased four times over the past five recruitment periods as employers prepare to take on their highest number of graduates next year.
Said to be the definitive annual guide to Britain’s most sought-after and prestigious employers of graduates, the latest rankings have been compiled from interviews with just over 18,400 graduates who left a UK university in 2015.
All participants were asked the open-ended question: “Which employer do you think offers the best opportunities for graduates?”
The latest REC/KPMG Jobs Report continues to show growth in staff appointments although the rate of increase in permanent appointments slowed to a 27-month low. Similarly, temporary and contract staff billings rose at their slowest pace since May 2013.
The availability of candidates for permanent roles fell further in August, with the rate of decline accelerating to the sharpest for a year. Temporary/contract staff availability was also down, with the latest drop the most marked in ten months.
Starting salaries for people placed in permanent roles continued to increase in August. The rate of growth remained strong relative to the survey’s historical average. Temporary/contract staff pay rose further, albeit at the slowest pace in 16 months.
Vacancies continued to rise at a marked rate in August. Demand for permanent staff continued to rise at a faster pace than that for temps, with the latter seeing the slowest growth for 26 months.
Commenting on the latest survey results, Bernard Brown, Partner at KPMG, said: “There was no respite for recruiters in August, who were left struggling to fill vacancies after a vast swathe of Britain’s job seekers appeared to take the summer off. The number of people looking for a job fell at the sharpest rate seen for a year, leaving unfilled posts across the economy. Many candidates may have simply shelved their plans for the summer, believing their prospects to be stronger in September. However this is of little comfort to those businesses needing staff now to meet demand for their goods and services.”
The UK is to enjoy decent quarterly GDP growth the CBI has predicted as it upgrades its forecasts for this year and next. The business lobby group now expects growth of 2.6% this year and 2.8% next year, up from its June forecast of 2.4% and 2.5% respectively.
Increased household spending and robust investment growth will drive the improved growth, the CBI believes. The CBI now expects interest rates to rise in the first quarter of next year. In June, it had expected rates to begin rising from their historic low of 0.5% from the start of April next year.
But it now says the improved growth picture alongside more hawkish comments from the Bank of England’s rate-setting Monetary Policy Committee had prompted it to bring its prediction forward.
“We now expect interest rates to rise to 0.75% in the first quarter of 2016, and then rise at a slow pace thereafter,” the CBI said. The CBI said it expected growth until the end of next year to continue at a similar pace to the three months to the end of June, averaging 0.7% a quarter.
Household spending and business investment would remain the two key factors driving growth next year, it added. It said improved productivity had also helped to boost wage growth. This combined with low inflation, largely due to the drop in commodity prices, meant households had more to spend, the CBI said.
But it warned that the outlook on exports was somewhat muted with the strong pound hitting the UK’s competitiveness abroad. And it said Eurozone growth would remain subdued for the foreseeable future.
“Strong domestic demand and upbeat official data since our last forecast has boosted our outlook for 2015. We expect this strength to continue into next year,” said CBI director for economics Rain Newton-Smith.
The latest KPMG REC Report on Jobs shows the number of people placed in permanent jobs by recruitment consultants continued to rise in April. Moreover, the rate of expansion quickened to an eight-month high. This reflected a stronger increase in demand for staff, with permanent vacancies rising at the fastest pace since October 2014.
Agency short-term staff billings also grew in April but the latest increase was the slowest in six months. This corresponded with a moderation in the rate of growth of demand for temporary/contract staff to the least marked since January.
Growth of permanent staff salaries accelerated to a nine-month high in April, with panellists highlighting a combination of strong demand and skill shortages. Hourly rates of pay for temporary/contract staff meanwhile increased at the fastest pace since July 2007.
The availability of staff to fill permanent roles deteriorated further in April, with the rate of contraction accelerating to the sharpest in five months. Temporary/contract staff availability meanwhile declined at a marked pace that was similar to that seen in March
Commenting on the latest survey results, Bernard Brown, Partner and Head of Business Services at KPMG, said:
“There has been a resurgence of recruitment into Britain’s boardrooms, with businesses poaching top talent to drive their companies forward. This surge of executive hires is a strong indication of underlying business sentiment and their ambitions for the future.
“However, while the highest paid are benefiting from the recovery, demand for permanent staff remains more muted in the manufacturing sector. This section of the market is often the first to stall in tough economic conditions and the last to recover, emphasising the divergent fortunes facing job seekers in today’s market.”
A survey by Expectations! Recruitment Services has found that firms that take more than 24 hours to make a decision about interviewees are increasingly losing candidates to other vacancies. Due to the buoyant times and the skills shortage, the availability cycle of a potential recruit has fallen to just 24 hours, rather than the 2-3 weeks that businesses became accustomed to during the recession.
Jo Long, Director at Expectations! Recruitment Services says: “During a recession, employee loyalty increases as job scarcity and insecurity drive employees to stay with their employer; in turn employers have weeks or even months to fill vacancies, responding to market pressures and expecting excellent value for money.
“Once the market returns to buoyancy, and in this case entering a period of extreme skills shortage, the tables are turned and employees have far greater choice of where to apply and offer their skills.”
Victoria Maddock, Managing Director, Expectations! Recruitment Services says: “Businesses can increase the time they have to appoint a candidate by properly planning their recruitment process.
“Holding all interviews in a 24 or 48 hour window, including professional recruiters or assessment centres, and communicating daily all help to increase the likelihood of ensuring a potential employee is happy to wait.”
The latest REC/KPMG report on jobs for February continues to paint a bright picture of the UK jobs market. It suggests that permanent staff placements rose further in February with the rate of growth in appointments marked and the fastest since last October. Temp billings also rose strongly at their sharpest pace for five months.
Vacancies available for people seeking employment also continued to increase in February and the overall demand for staff grew at the strongest rate in four months, with both permanent and temporary workers seeing faster increases.
Permanent staff starting salaries continue to increase in February with the rate of growth unchanged from the marked pace seen in January. Temporary and contract staff hourly pay rates also rose further with the latest increase stronger than seen one month previously. The availability of staff to fill job vacancies decreased further in February with both permanent and temporary candidate supply down faster than in the previous month.
Commenting on the latest survey results, Bernard Brown, Partner and Head of Business Services at KPMG, said: “Recovery in the job market is gaining real traction, and this should help shore up consumer confidence in the run up to the election. The recovery is being heavily driven by hiring activity by UK plc, while the public sector remains in a semi-stasis ahead of further anticipated cuts later in the year.”