Could the UK run out of workers?
Record high employment has strengthened employee bargaining power amid mounting fears of skills shortage
Record levels of employment have raised fears of a mounting skills shortage at UK companies, as the jobs markets continues to buck Brexit uncertainty.
Figures from the Office for National Statistics reveal the number of British job vacancies rose by 16,000 in the three months to January to an estimated 870,000, the highest level since comparable records began in 2001.
The Times says “Britain’s employment success over the past year can be explained by a large increase in the female workforce”. Female unemployment has fallen below 4% for the first time on record “as the rising pension age for women and Britain’s thriving jobs market drew more women into the workforce” says the paper.
Overall, 32.6 million people are now in work, with the jobless rate of 4% at its lowest level since early 1975.
The Financial Times says “the data suggest that Britain’s jobs market has so far been insulated from the effects of uncertainty over the outcome of the Brexit negotiations — even as overall economic growth last year fell to its lowest level since 2012 because of a drop in business investment”.
“So little sign of Brexit uncertainty hitting hiring so far,” says BBC economics correspondent Dharshini David, “but demand in the labour market tends to lag significantly behind changes in output [and] more recent employment surveys show a marked deterioration in January, so a Brexit effect might start to weaken employment growth in the next batch of official data.”
For now at least, the employment shortfall, which has been exacerbated by a fall in the numbers of EU workers coming to Britain since Brexit, has strengthened employees’ bargaining power to secure above-inflation increases, helping total average weekly wages rise by 3.4% in the year to December 2018.
“While firms have responded by raising wages above inflation,” says The Guardian, “employers’ groups have warned that tougher post-Brexit immigration rules could limit their access to workers – acting as a drag on the economy and driving up consumer prices.”
Pay growth also still lags well below the previous peak of 6.6% recorded in February 2007 before the financial crisis, while there are a far higher proportion of workers on precarious or zero-hours contracts than a decade ago.
Frances O’Grady, the TUC general secretary, said: “Employers are still not giving people the pay rises they deserve, leaving them worse-off than a decade ago. Millions don’t have the security of a solid job, because the government won’t crack down on insecure work. And the prime minister’s reckless Brexit strategy is causing employers to take flight.”