Employment boom is improving job quality but not pay

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A tightening UK labour market, with employment at a new record high of 75.1 per cent and a significant slow down in the growth of EU workers, is raising job quality but not pay packets, the Resolution Foundation said in response to today’s Labour Market data release.

With unemployment at 4.4 per cent, the lowest since 1975, and the annual growth in EU workers falling to just 2 per cent, the lowest since 2010 and contrasting with growth of 14 per cent last year, the UK labour market is tightening.

The Foundation notes that this jobs boom is seeing some improvements in job security as employers compete to attract workers. Today’s figures show:

  • Though still high overall, the number of workers on a zero-hours contract fell by 20,000 (2 per cent), compared to a growth of 100,000 (10 per cent) last year.
  • Self-employment grew by less than 1 per cent over the past year, compared to 6 per cent the year before.
  • All of the net growth in employment over the past year came from full time work, with part time work falling.

But this good news on the nature of work is failing to feed through into higher pay. Real growth pay fell by 0.5 per cent. Pay growth is now also negative in 80 per cent of sectors.

Stephen Clarke, Policy Analyst at the Resolution Foundation, said:

“It’s good news that employers are having to up the security of the jobs they are offering, and that workers can be more picky in turning down insecure work than they could have been a few years ago thanks to a tightening labour market.

“But there is no sign of the jobs boom feeding through into badly needed pay rises. Real pay is now falling across 80 per cent of the sectors of our economy squeezing living standards right across the country.”

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