Robust jobs market
Jobless at 48-year low, but wages also fall
Unemployment fell to 3.7% in the first three months of the year – its lowest since 1974 – from 4.1% in the previous quarter as demand for workers remains buoyant.
For the first time ever, there were fewer unemployed people than job vacancies, although the fall in the rate was also down to a rise in the number of people dropping out of the jobs market, the figures showed. The labour force is now 1.03m smaller than it would have been had 2010-2019 trends continued.
Wage rates also fell over the first quarter, according to the data from the Office for National Statistics. Earnings, when adjusted for inflation, dropped by 1.2%.
The unemployment rate in Scotland hit a record low of 3.2%, down 0.9% on the previous quarter. The number of people unemployed in Scotland hit 88,000, a record low since the current labour force survey series began in 1992.
Scotland had an estimated employment rate of 75.6%, an increase of 1.4% over the quarter. Scotland’s employment rate was slightly below the UK rate of 75.7%.
Chancellor Rishi Sunak said: “The unprecedented support we provided through our Plan for Jobs has led to the jobs market remaining robust despite global challenges, with the unemployment rate near record-lows and the number of payrolled employees at a record high.
“I understand that these are anxious times for people, but it’s reassuring that fewer people are out of work than was previously feared, and we are helping them to keep more of their hard-earned money through tax cuts, changes to Universal Credit and support with household bills worth £22 billion this financial year.”
Suren Thiru, head of economics at the British Chambers of Commerce, said: “The headline figures more reflect several distorting factors, including rising economic inactivity, rather than the reality on the ground.
“Record jobs vacancies highlight the perilous hiring crunch facing businesses. With rising economic inactivity confirming that the UK workforce is shrinking, labour shortages are likely to persistently drag on UK growth by stifling firms’ ability to operate at full capacity.”
Commenting on the Scottish data, Stuart McIntyre of the University of Strathclyde’s Fraser of Allander Institute, said: “In a number of ways, the Scottish labour market is back to its pre-pandemic levels of activity. Rates of employment, economic inactivity and unemployment are in line with – or slightly better than – where they were at the same point in 2019.
“The big challenge remains weak pay growth, and in turn the cost of living crisis facing families across the country. After we take account of rising inflation, average pay across the UK fell 1.2% over the past year. It is only when we include bonus payments that inflation adjusted pay grew over the past 12 months.
“Bonus payments are becoming an increasingly common feature of the job market at the moment as businesses across the economy compete for workers by offering joining bonuses, but what matters for living standards over the longer term is growth in regular pay.”
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