UK unemployment falls 99,000. Public sector jobs at lowest percentage – 18.8% – since 1999

18th December 2013

UK unemployment has fallen to 99,000 in the three months to October with 2.39 million now out of work according to official figures. In addition, the numbers working in the public sector have fallen to an all time low according to the Office for National Statistics.

The unemployment rate fell to 7.4%, the lowest rate since the February-to-April period in 2009 and this compares with a figure of 7.6% for the three months to September.

The ONS data also showed that the number of people claiming Jobseeker’s Allowance in November fell by 36,700 to 1.27 million. The percentage of people aged from 16 to 64 who were in work – the employment rate – was 72.0%. The employment rate is up 0.4 percentage points from May to July 2013 and up 0.8 from a year earlier. There were 30.09 million people in employment aged 16 and over, up 250,000 from May to July 2013 and up 485,000 from a year earlier.

The percentage of people aged from 16 to 64 who were economically inactive (the economic inactivity rate) was 22.1% (the lowest since 1991). The inactivity rate is down 0.1 percentage points from May to July 2013 and down 0.4 percentage points from a year earlier. There were 8.92 million economically inactive people aged from 16 to 64, down 45,000 from May to July 2013 and down 156,000 from a year earlier.

Total pay rose by 0.9% compared with August to October 2012. Regular pay rose by 0.8% over the same period.

For September 2013 there were 5.7 million people working in the public sector across the UK accounting for 18.8% of people in employment. This is the lowest percentage since the series began in 1999. The public sector comprises of 2.8 million people working in central government, 2.4 million working in local government and 459,000 in public corporations. Looking in more detail at the types of industries the top three for September 2013 were the National Health Service (NHS) which employed 1.6 million people, Education which employed 1.5 million people and Public Administration which employed 1.1 million people. (shown in the graph below.

Currency view:

Chris Towner, director of FX advisory services at foreign currency specialists HiFX says that sterling is likely to strengthen. He says: “The broad based recovery in the UK which has seen the economy grow by 0.8% in the third quarter is now translating into an improvement in the jobs market. The headline unemployment rate unveiled a drop from 7.6% to 7.4% (lowest since April 2009), which was better than expected, and we are seeing the 7% target level for the Bank of England to review adjusting rates appear on the horizon far sooner than had been expected. At the same time though we had the minutes from the previous Bank of England meeting which said that further sterling strength could hurt the recovery”.

“This may be a warning; however, looking at the EU unemployment rate reach historic highs at 12.2% while the UK unemployment rate has dropped from 7.9% to 7.4% through 2013, it’s quite easy to make a case for sterling to strengthen against the euro. What a difference a year makes! At the beginning of 2013 we were bracing ourselves for a triple dip and to witness such a turnaround in the economy means that going into 2014 the UK may see the rating agencies upgrade their downgrade back to AAA.”

Employers still wary of raising basic salaries

Donna Obstfeld, managing director of the SME-focused HR practice, DOHR, says:”We can now be more confident that things really are getting back on track, and this confidence will grow further as the unemployment figure continues to drop quarter on quarter.

 “But it’s not all good news. While more people are in jobs, employers still remain very nervous about raising basic salaries, as this increases their exposure to risk. We work with SMEs around the UK and while they see a recovery, and are slightly more upbeat, they are still deeply cautious when hiring new permanent staff and awarding pay increases as these are fixed costs.  This is reflected in the fact that regular pay has risen by just 0.8%, way below inflation.
“More people are in jobs but many people are still feeling the pinch. Businesses, while accepting they have to grow, are still being very conservative about making permanent decisions and would prefer to put a fixed amount of money into other areas of their business i.e. IT systems, which will enable them to maximise the efficiency of the staff they already have.
“What we’re seeing a lot of, these days, is employers putting less money into basic pay and incentivising staff via bonuses. This can be seen with the slightly higher increase in total pay figures.”

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