Round-up of the week

Employment rate hits 74.1 per cent

The employment rate in the UK has reached its highest level on record, official figures have revealed.

According to the Office for National Statistics (ONS), 31.4 million people were in work between October and December 2015. This is a rise of 521,000 when compared with the final quarter of 2014 and means the employment rate now stands at 74.1 per cent.

The number of job vacancies also rose to a record high in the last three months of 2015, going up to 776,000. Meanwhile, unemployment fell by 60,000 to 1.69 million.

Iain Duncan Smith, the work and pensions secretary, has hailed the findings, commenting: "February is another record-breaking month with the employment rate now at the highest it has ever been and wages continuing to grow.

"At a time when we are seeing the number of workless households at its lowest ever, this is further proof that our economic and welfare reforms are delivering more security and providing opportunities that give families the best chance in life."

Business community responds to labour market figures

The upturn in employment in the UK has been commended by the country's leading business groups.

According to the CBI, the increase is an "encouraging" development. However, director for employment and skills Neil Carberry pointed out that pay growth remains "lacklustre", which he believes "underlines the need for a pick-up in productivity before wages can rise faster".

"Propelling innovation by broadening access to existing research and development incentives and not adding to the cumulative burden on businesses, from recent government policies, will help firms to create more jobs and boost productivity," he commented.

The British Chambers of Commerce has also welcomed the data, saying it shows the UK's "dynamic and vibrant labour market remains a source of strength for our economy at a time of major international and domestic headwinds".

However, David Kern, chief economist at the body, pointed out that earnings growth is "stuck at around two per cent".  

This, he said, confirms that inflationary pressures remain muted and will enable the Bank of England's Monetary Policy to delay any interest rate hike.

"If we are to continue to see a sustained improvement in labour market conditions much more needs to be done to close the UK’s skills gaps which, as our own Quarterly Economic Survey shows, are leaving companies struggling the recruit the staff they need to grow," Mr Kern commented.

James Sproule, chief economist at the Institute of Directors, added that the strong employment rate in the UK is "one of the few bright spots in a world where there are an increasing number of economic uncertainties".

He suggested that while wage growth might appear modest, it could reflect other developments such as an "impressive" increase in the number of young people who are in work.

To discuss conditions in the labour market and operating environment further, speak to one of our experts here at The Maine Group!