Today’s labour market statistics show that the number of people in work has risen strongly thanks to the full-time job opportunities offered by businesses. Wage growth has also risen, led by the private sector. And with increases in the cost of living remaining very low, employees will be feeling the benefit in their pockets. But while the number of people unemployed has fallen again, the pace of decline has slowed somewhat. In fact, although long-term unemployment fell, short-term unemployment actually edged up slightly

Employment rises strongly

Data shows that, thanks to the UK’s flexible labour market, the number of people in work grew by a healthy amount.
• In the first three months of this year, the number of people in work rose by 202,000. This increase was slightly less than last month, it is still strong compared to rises seen in the second half of last year.
• These changes mean that the employment rate has now risen to 60%.
• With the recovery more firmly embedded, businesses are able to offer new job opportunities. As a result, the majority of people moving into work took up full-time positions with an employer, rather than working for themselves
• In the three months to March, the number of employees increased by 189,000 and 71% of these people were working full-time.
• In comparison, the number of people choosing to be their own boss increased only slightly (+4,000 in the three months to March).
• Although women have benefited most from the rise in employment during the majority of the recovery, the last three months saw male employment rise faster (144,000, a rise of 0.9%) than employment amongst women (58,000, a rise of only 0.4%).

The UK compares well internationally

The UK has not only done well at creating job opportunities, it also compares well internationally.
• Using data on the employment rate of those aged 15-64 (the rest of this update looks at data for those aged 16+) in the G7 countries, with an employment rate of 73.5%, the UK ranks 2nd behind Germany (74.1%).*
• A relatively high proportion of people are also in work in Japan (73.0%) and Canada (72.5%). The US ranks fifth (68.6%) followed by France (64.1%) and Italy (56.0%).

Unemployment falls, but at a slower pace

Although the picture on employment is positive, the data on unemployment is slightly more mixed.
Unemployment fell by only 35,000 in the three months to March, the slowest fall since summer 2013.
This fall means that there are now 1.83 million people out of work, an ILO unemployment rate of 5.5%.
Looking at the unemployment data in a little more detail, two main groups were impacted by the slow down in the pace at which unemployment fell:
• The short-term unemployed. Although the number of people unemployed for less than six months has been falling throughout much of the recovery, it actually rose a little in the first three months of this year (31,000, a rise of 3.4%). This could be a blip rather than a trend so we will continue to watch this indicator in future months.
• Young people. Although unemployment amongst 16-24 year-olds has been falling rapidly over the last year, it edged down only slightly in the three months to March (-5,000) and, as a result, the youth unemployment rate now stands at 15.9%.

On a more positive note, unemployment fell amongst those considered to be further away from the labour market. The number of people unemployed for over six but less than 12 months fell by 16,000 in the three months to March. Similarly, the number of people looking for work for over 12 months dropped by 50,000.
Like the unemployment rate, the claimant count also edged down at a slower pace (-12,600 from March to April). In fact, this was the slowest fall in the claimant count in just over two years.
This narrower, but timelier measure of unemployment could indicate that we will see slower falls in
unemployment in future. But, this is to be expected as the ILO unemployment rate gets closer to its prerecession value (5.2%).

Two thirds of nations and regions see employment rise...

Mirroring the national picture, the majority of the UK’s nations and regions saw employment rise.
• The south east (+65,000), south west (+50,000), north west (+43,000) and East of England (+31,000) led the way.
• London (+18,000), Northern Ireland (+17,000), West Midlands (+16,000) and Wales (+5,000) also saw positive employment growth.
• Employment remained broadly unchanged in Scotland and the north east (both -3,000) but fell in Yorkshire and Humber (-13,000) and the East Midlands (-23,000)

...although fewer than half saw unemployment fall

The mixed picture on unemployment across the UK as a whole was reflected in the UK’s nations and regions.
• The five places which saw unemployment fall were: the north west (-28,000), the East of England (-19,000), the south east (-15,000), London (-10,000) and the north east (-7,000).
• The number of people out of work and looking for work remained relatively similar in the south west (-3,000), East Midlands and Wales (both 0).
• Finally, unemployment rose in Northern Ireland (+6,000), the West Midlands (+10,000), Yorkshire and Humber (+13,000) and Scotland (+19,000).

In some places, like Yorkshire and Humber, unemployment and employment have both risen. One
reason for this is that people who were previously “economically inactive” have now entered the labour
force again and are either looking for work and unemployed or have found work.

Unemployment is back to pre-recession levels in some areas

Those areas that saw unemployment fall in the three months to March also tend to have unemployment rates which are back to, or below, pre-recession levels.
• London, the East Midlands, the north west and East of England, the unemployment rate is now below where it was before the crisis began.
• The West Midlands, south east and south west the unemployment rate is getting close to pre-recession levels.
• The north east, Scotland, Wales, Northern Ireland and Yorkshire and Humber the proportion of people out of work and looking for work remains higher than just before the downturn began.

Private sector leading the way on pay growth

Turning back to look at those in work, it is positive to see that pay growth has risen again, driven by the private sector.
• Annual growth in private sector regular pay, which excludes bonuses, sped up from 2.2% in the three months to February to 2.7% in the three months to March. The last time annual growth in regular pay was higher was the three months to February 2009.
• In comparison, annual growth in regular pay growth in the public sector remained unchanged compared to the previous quarter at 0.9%.
• The picture is similar when looking at annual growth in total pay which includes bonuses. In the three months to March, private sector total pay grew by 2.4%, up from 1.9% in the three Months to February. Across the economy as a whole, total pay growth rose from 1.7% to 1.9%.
• Increases in the pace of pay growth, combined with extremely low inflation, mean that employees’ wages, in terms of the goods and services they can buy, have been growing (annual CPI inflation over the same period was 0.1%).
• That said, for wage growth to climb back to its prerecession level, productivity improvements are needed. With productivity growth of just 0.3% in the final quarter of 2014 this is much lower than the decade prior to the recession (2.1% per annum).

To read the complete report complied by the CBI please visit