Is UK unemployment at its lowest since 1975?

  • img Harvey Cawdron
  • POSTED ON 14 Aug 2018

Claims

According to official figures from the Office for National Statistics (ONS), in 3 months to June UK unemployment decreased by 65,000 to 1.36 million - the lowest for over 40 years. 

They also display a rise in productivity, but a slowdown in wage growth. 

Average regular pay, not including bonuses, increased by 2.7% in the 3 months to June, compared with 2.8% a year ago. 

The ONS figures also showed that the number of EU nationals working in the UK fell by a record amount. The fall was the biggest there has been since records began in 1997. The levels of unemployment continue a trend seen since the 2016 referendum. 

This stands in stark contrast to the number of non-EU nationals working in the UK, which is 1.27 million - 74,000 more than last year. 

The CBI claimed that the size of the UK workforce was shrinking while vacancies for skills and labour were growing. 

The CBI head of employment, Matthew Percival, said that the government needed to guarantee that EU workers could continue to work, even if there is a 'no-deal' Brexit. 

In the quarter to June, the unemployment rate fell to 4%, exceeding the expectations of economists and is the lowest since February 1975. 

The fall came despite a smaller-than-expected 42,000 rise in the number of jobs created during that period. 

According to the BBC, regarding productivity, the ONS added that output per hour worked had increased by 1.5% - the largest jump since late 2016. 

The figures also showed that there were 104,000 fewer workers with 'zero-hours' contracts when compared with the year before, which do not guarantee a set number of hours each week. That left 780,000 people with such contracts as their main job. 

It also claimed that the amount of people aged 16 to 64 who were not working, searching for work or available to work - a condition known as 'economically inactive' - grew by 77,000 from the first quarter of the year. However, despite showing an increase from the first quarter of the year, the economic inactivity rate, currently 21.2%, was slightly lower than the 21.3% rating from a year earlier.

Earlier in the month, the Bank of England increased interest rates for only the second time in 10 years, as it attempted to manage inflation amid indications of a strengthening British economy. 

But, Suren Thiru, head of economics at the British Chambers of Commerce, said that this now appeared to be a premature move. He said 'Achieving sustained increases in wage growth remains a key challenge, with sluggish productivity, underemployment and the myriad of high upfront business costs weighing down on pay settlements. As such, there remains precious little sign that wage growth is set to take off - undermining a key assumption behind the Monetary Policy Committee's recent decision to raise rates.'