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Full-time work grows

More in work as wage growth puts pressure on companies


Firms are facing higher pay demands

A record number of people are in work across the UK, helping households defy the economic squeeze as companies come under pressure to raise wages.

UK unemployment rose slightly from 3.8% to 3.9% even though the number of people in work hit a record 76.1% with 32.81 million people in jobs, 425,000 more than a year earlier, according to the Office for National Statistics. This was was largely because of more people working full-time.

Matt Hughes, deputy head of labour market statistics at the ONS, said: “Employment continues to increase, with three-quarters of this year’s growth being due to more women working.

“However, the number of vacancies has been falling for six months, with fewer now than there were this time last year.”

Average weekly wage growth hit 3.9% in the year to June, according to the data. It is ahead of the 3.6% recorded in the year to May and above expectations for 3.8%. However, productivity decreased by 0.6% for the quarter between April to June compared with the same period last year.

Mr Hughes, said: “Excluding bonuses, real wages are growing at their fastest in nearly four years, but pay levels still have not returned to their pre-downturn peak.”

Tej Parikh, chief economist at the Institute of Directors, said that while the jobs market remained “a source of strength for the UK economy”, it may be reaching its peak.

“As more workers have been snapped up, firms have found it harder to fill their openings. While competition has pushed up salaries, thin margins and low productivity may set a ceiling for pay growth. Although vacancies remain high by historic standards, the number has been dropping since the start of the year.”

Scotland’s employment rate is unchanged on the last quarter at 75.4% though unemployment also increased slightly over the same period.

Business Minister Jamie Hepburn said: “These latest results show that Scotland is seeing the benefits of our Labour Market Strategy – driving inclusive and sustainable economic growth through delivering fair and good quality work across our society.

Jamie Hepburn

Jamie Hepburn: benefits of SNP strategy (pic: Terry Murden)

“Scotland’s employment rate rose over the year to 75.4% and remains close to the highest on record. The unemployment rate fell over the year to 3.6%, also close to the record low, and 0.2 percentage points lower than the UK’s (3.9%). Our unemployment rate has now been lower than the UK’s for 11 months in a row.

“Employment outcomes for women and young people continue to be better in Scotland than in the UK – with Scotland’s employment and unemployment rates for both women and those aged 16-24 outperforming the UK’s.”

Andrew McRae, the Federation of Small Businesses’s Scotland policy chairman, said: “These figures show that Scotland’s employment market is just about holding steady. But a no-deal no-transition Brexit in a matter of weeks risks an economic breakdown and puts at risk those Scottish smaller firms that are so vital to generating and sustaining jobs.”

Stuart McIntyre of the Fraser of Allander Institute said: “The latest labour market data show a jump of 0.4%-points in the unemployment rate in Scotland. However, it is important not to read too much into such an increase just yet. Scotland’s unemployment rate remains just 3.6%, which is still 0.5-%-points lower than a year ago and well below the long-term average.

“Scotland’s unemployment rate remains lower than the UK as a whole, which sits at 3.9%.

It will be important to see if this movement is simply a temporary blip

– Stuart McIntrye, Fraser of Allander Institute

“At the same time, the employment rate in Scotland is unchanged on the previous three months and remains higher than it was a year ago.

“That said, monthly changes can be volatile and it will be important to see if this movement is simply a temporary blip or the beginning of a more sustained change.

“As always, we would caution that these impressive headline labour market numbers are not currently being reflected in substantial improvements in real take-home wage growth. With inflation running at just under 2% – and likely to rise in the months ahead as a result of the fall in Sterling – many households will be continuing to feel the squeeze.​”

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