Unemployment drop hides fear of productivity fall and labour market drying up

Unemployment has fallen to 1.42m, according to latest official figures from the Office for National Statistics.

Data released this morning reveals unemployment fell by 46,000 in the three months to March.

The figures also revealed wages rose at an annual rate of 2.9% in the quarter, while there were 396,000 more people in work compared with the same period a year ago. 

Commenting on the figures, Martin Talbot, director at careers site totaljobs, said: “This result is great news for the UK jobs market, as it’s further proof that job confidence and security is withstanding the pressure squeezing other sectors of the UK economy. As such, we expect to see a battle brewing among employers who are looking to secure and retain the most talented individuals.

“We have seen a continued resilience in job availabilities on our platform as well. Tech and IT have seen the greatest rise in job postings, standing 18% higher than last month. With availabilities in most industries, it’s a buyer’s market.

“Regardless of what the future holds, we are confident that British businesses and employees will draw great confidence from this month’s strong labour market results.”

Also commenting, Tara Sinclair, economist and senior fellow at global job site Indeed, said while it’s too early to say if these figures will prove to be the high water mark, a clear line in the sand has been drawn. 

“However, the reality is, without adding more people to the potential workforce, the pace of job generation will slow and could cause an already tight labour market to burst.

“It is clear that thousands of employers are still betting on economic growth and are trying to hire. As that demand bumps up against the limited supply of workers, there is a need to offer higher salaries to attract new staff.

“A word of caution though. The latest figures show productivity is falling and it bears repeating that the UK’s economic growth has painted a worrying picture. These employment figures are out of sync with the wider picture and something will have to give in the not too distant future.

“Pay rises alone cannot deliver lasting benefit to Britain’s economy; the Holy Grail remains productivity. And improving that remains as elusive as ever.”

According to Phil Coulter, EMEA head of technology at search firm Korn Ferry Futurestep, while the figures have once again confirmed strong employment growth up and down the country, the challenge still remains competing for the right staff with the right skills to get the job done. 

“The truth is, not all businesses are in the financial position to offer substantial monetary awards to their staff, regardless of their desires. The good news is that, for the most part employees’ expectations have begun to shift. For today’s workforce, money is not necessarily the most effective way of engaging staff with their role, and it needn’t be the most effective way to reward them, either.

“Organisations must ensure that they have the pulling power to attract the best. From flexible working schemes for a better work-life balance and increased holiday allowance, to robust career development programmes and creative working environments, employers need to communicate the benefits associated with their brand. 

“Moreover, speed and agility are vital in any kind of competitive market, and this applies to the switched-on, digitally-savvy recruitment marketplace. Having the right recruitment tools and technology in place will make the process efficient and more responsive to the expectations of prospective employees.”

But Recruitment & Employment Confederation (REC) director of policy Tom Hadley warned the UK doesn’t have enough people to fill current vacancies.

“There are plenty of jobs out there for candidates with high in-demand skills in sectors ranging from education to hospitality. We simply don’t have the number of people in this country to fill the vacancies businesses are creating. If the government wants to boost economic growth businesses need to be able to continue to attract and recruit workers from the EU.”

Commenting on the fortunes of the self-employed, Julia Kermode, chief executive of trade association The Freelancer & Contractor Services Association (FCSA), said: “Self-employment has fallen year on year, particularly amongst those working full-time hours on a self-employed basis (-3.7%), but there has been an increase (+6.4%) in people undertaking part-time self-employed roles.

The increase in part-time self-employment is likely due to people undertaking extra roles to supplement other work, and those choosing to stop working fulltime in favour of a portfolio of part-time roles that give them the flexibility they want.”

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