Employment rate at highest level in three years

The UK employment rate has risen to its highest level since May 2009, with 71% of 16- to 64-year-olds now in work, according to figures from the Office for National Statistics (ONS).

The ONS Labour Market Statistics showed a rise of 0.4% in employment during the three months to the end of June, with 201,000 more people in jobs during the quarter than in the previous three months, bringing the total number of people in employment to 29.48 million.

Over the same period, unemployment fell by 46,000 to reach 2.56 million but was still up on the previous year, with 51,000 more people unemployed in the three months to June 2012 than during the same quarter in 2011.

There was also a small fall in unemployment among 16- to 24-year-olds, down 4,000 on the previous quarter, to reach 1.01 million.

However, while the number of full-time workers increased by 130,000 to reach 21.41 million, the number of people forced to work part time because they could not find full-time employment increased by 16,000 to reach 1.42 million, the highest figure since comparable records began 20 years ago.

The Chartered Institute of Personnel and Development (CIPD) has warned that, while the ONS figures are positive, the labour market might not hold up if the economy doesn’t improve in the near future.

Gerwyn Davies, labour market adviser at the CIPD, said: “In a continuation of recent trends, today’s figures appear to show yet another strong labour market performance. However, a number of factors suggest that fault lines are emerging. For example, redundancy activity has picked up for the first time this year and there are record numbers of self-employed and people working part time because they cannot find a full-time job.

“In addition, today’s figures don’t reflect the lengths to which a significant number of employers are going in order to hold on to skilled staff despite low levels of demand, as the CIPD reported in its quarterly Labour Market Outlook earlier this week. The continued fall in productivity and increase in unit labour costs will put more pressure on employers.”

While some believe that the Olympics is behind the employment boost, The Work Foundation has argued that this is not the case.

Ian Brinkley, director at The Work Foundation, said: “Some may be tempted to see this as a short-term Olympic effect because many of the new jobs were in London – although the statistics only cover the period up to June, and regional figures are much less reliable than the national statistics. We are less convinced. Employment grew just as strongly in the North-West. Moreover, nationally there was only a modest increase in temporary jobs. Finally, if the economic statistics are right and overall economic activity across the UK is falling, then any temporary boost in London has been balanced by falls elsewhere, leaving the national picture unchanged.

“On balance, we still expect the labour market to go into reverse in the next few months, especially if the eurozone economies continue to contract. But if the UK labour market goes on apparently defying economic gravity, we also need to take a hard look at whether the current GDP statistics are giving too pessimistic a view of the UK economy.”

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