The Labour Force Survey showed today that between May to July 2017 and August to October 2017, the number of employed and unemployed people fell, while the number of people not working and not seeking employment increased. 32.08 million people were in work, with 56,000 fewer than for May to July. 1.43 million people were unemployed, which is 26,000 fewer than for May to July 2017.

According to the Office for National Statistics’ (ONS)—the UK’s independent official statistics institute—latest estimates of employment, unemployment, economic inactivity and other employment-related statistics, the average weekly earnings in nominal terms (not adjusted for price inflation) increased by 2.5% including bonuses, while the average weekly earnings in real terms (adjusted for price inflation) fell by 0.2% including bonuses.

Today’s report shows that Britain’s thriving market has come to a stalemate, with 56,000 less people working in the three months starting from August and ending in October.

The ONS statistician Matt Hughes said: “Employment stayed close to its record high and while up on a year ago, declined compared with the previous three months. Unemployment also fell, but there was a rise in the number of people who were neither working nor looking for a job. Meanwhile the number of vacancies continues to grow, reaching a new record high.”

The result is low-paid employees getting very low salaries, young people having withdrawn completely from the labour market, as real wages have fallen for eight consecutive months. However, economists are hoping that by next year the squeeze in real income may end. 

At the same time, vacancies are at a record high, despite the employment fall. For example, there were 798,000 job vacancies in the quarter from September to November. Companies reported that it was difficult to hire employees because of the increase in student numbers and a fall in the number of citizens from the central and eastern European countries.

Reaction and comments on the report

The Minister for Employment, Damian Hinds, claimed that the UK’s labour market was going strong, as he stressed that the unemployment rate was at its lowest in over 40 years: “We’re ending the year on a strong note with figures showing the unemployment rate has fallen every month in 2017, and is now at the lowest it’s been in over 40 years. Employment is at a near-record high, and there are over 3 million more people in work now compared to 2010 – that’s more than the population of Greater Manchester. Universal Credit is helping people get into work quicker, and ensuring they get more money in their pockets for every hour they work. Universal Credit supports both the unemployed and the low paid, as people don’t have to end their benefit claim when they find a job. This is especially important at this time of year, when many people take on temporary seasonal work.”

But, Professor of Economics at Lancaster University Management School, Geraint Jones, said that the labour market has peaked and is now “starting to turn down.” He added: “Employment fell by some 56000 over the quarter to October. While there was a small increase in the number of full-time employees, there was a large fall (some 65000) in the number of full-time self-employed workers. Unemployment, meanwhile, continued to fall, and now stands at 4.3%. The simultaneous fall in employment and unemployment is possible because there has been a large increase (115000 over the quarter) in the number of economically inactive.”

Jones clarified that the biggest falls in employment were in the distribution sector (38000) and in information and communication (37000). However, the numbers of people employed in professional, scientific and technical fields, and in administration and support have increased. 

In terms of salaries, while the three-month average measure of total weekly pay increased from 2.3% to 2.5%, real wages continued to fall. Wage growth remained slower than the rate of growth prices, and as Jones confirmed “Low, and stagnant, wages remain a problem.”

The chief executive of the Young Women’s Trust, Dr Carole Easton OBE, said that many young women, failing to get support and childcare have been left out of the labour market. As she said: “26,000 more young people are now economically inactive and out of education – a dramatic increase on the last quarter. Young women in particular are telling us they want to work but hundreds of thousands are getting shut out of the jobs market, including by a lack of convenient childcare and support. While the Government focuses on reducing its unemployment figures, 346,000 young women who are not included in the numbers are being left jobless and forgotten.”

TUC General Secretary Frances O’Grady found today’s labour market report disappointing: “2017 has been a bleak year for living standards. Real wages have now fallen for the last eight months in a row. And working people will be worse off this Christmas than they were a decade ago. Boosting pay packets should be a priority for the government - not a side issue.”

Today’s figures have been interpreted by the opposition as a sign of the government’s failure. The Shadow work and pensions secretary Debbie Abrahams said that the figures were evidence of “a Tory economic failure”: “Today’s figures are further evidence of Tory economic failure, only a day after inflation rose to its highest level in over five-and-a-half years. Both employment and real wages are falling, while the price of household essentials balloons, leaving millions of people worse off than they were in 2010. Eight million people in working households live in poverty, and many will struggle this Christmas as a direct result of this Government’s austerity policies.”