UK employment growth driven by foreign nationals, figures show

Jobs data show workers face rising costs and static pay, and no indication of Brexit vote triggering exodus of EU labour

The vast majority of employment growth was driven by non-UK nationals in the final three months of 2016 compared with a year earlier, the latest official figures on the labour market revealed.

Of the 303,000 more people in work between October and December compared with a year earlier, 233,000 were non-UK nationals, taking the total to 3.48 million according to the Office for National Statistics. UK nationals working in Britain increased by 70,000 over the same period to 28.44 million.

Over the past two decades, the number of non-UK nationals working in Britain has increased by more than a million, taking the proportion of the workforce from 3.8% to 10.9%, partly reflecting the expansion of the EU as new member states were admitted.

Interactive

The figures are likely to be seized upon ahead of the Stoke-on-Trent and Copeland by-elections next week. Both constituencies voted decisively for Brexit in the EU referendum last June.

Labour market expert John Philpott said there was little sign of an “exodus” of EU workers following the Brexit vote. “The level of EU-born people working in the UK was more or less flat in the second half of last year. While this may suggest the UK is no longer the draw it once was for EU migrants, Brexit has yet to trigger a big EU labour exit.”

The latest jobs report also revealed that Britain’s workers are struggling to get pay rises despite record levels of employment, with commentators warning that UK families are facing the prospect of a fresh squeeze in living standards over the next year.

Pay growth excluding bonuses slowed unexpectedly to 2.6% between October and December, from 2.7% between September and November, despite a record employment rate of 74.6% and a labour market that is “edging towards full capacity” according to the ONS.

Real pay growth of 1.4% was the slowest in two years, as the gap narrows between inflation – which is rising – and the rate of wage increases.

Frances O’Grady, TUC general secretary, said: “With prices rising faster, real pay growth is now slowing down. This will be worrying for families whose have still not seen their living standards recover following the financial crisis. Next month’s budget must set out a clear plan for preventing another fall in living standards.”

James Smith, economist at ING, said the latest report would “ring alarm bells” for consumers.

Fuel and food prices pushed up the headline inflation rate from 1.6% in December to 1.8% in January, the highest in more than two years.

Inflation is expected to reach about 3% over the next 12 months as the sharp fall in the value of the pound since the Brexit vote drives up the cost of goods imported from abroad.

Laura Gardiner, senior policy analyst at the Resolution Foundation, said: “The encouraging news on jobs isn’t feeding through into earnings, which have shown no sign of responding to fast-rising inflation. Unless this changes Britain is set for a fresh pay squeeze later this year.”

The number of people in work rose by 37,000 the final quarter of 2016 compared with the previous quarter, to 31.8 million. The employment rate among women hit 70% for the first time since records began in 1971.

The chancellor, Philip Hammond, tweeted: “Encouraging labour market stats out today; record high employment rate and youth unemployment at its lowest level for more than 12 years.”

Encouraging labour market stats out today; record high employment rate and youth unemployment at its lowest level for more than 12 years

— Philip Hammond (@PHammondMP) February 15, 2017

The unemployment rate remained unchanged at an 11-year low of 4.8% between October and December, with the number of people out of work falling by 7,000 to 1.6 million.

In January, the number of people claiming jobless benefits fell unexpectedly by 42,000 to 745,000. Economists had predicted a small rise of 800.

Debbie Abrahams, Labour’s shadow work and pensions secretary, welcomed the rise in employment but said it was worrying to see that rising living costs were catching up with wage growth.

“If this trend continues, the government’s abysmal record on living standards will get even worse,” she said. “With wages set to be lower in 2021 than before the Tories came to power, they must now act to stop the growing pressure on low and middle income families.”

graph

Contributor

Angela Monaghan

The GuardianTramp

Related Content

Article image
UK joins Greece at bottom of wage growth league
TUC found that between 2007 and 2015 in the UK, real wages fell by 10.4%, the joint lowest in OECD countries

Katie Allen and Larry Elliott

26, Jul, 2016 @11:01 PM

Article image
Average UK wages top pre-financial crisis levels
Wages finally end 12-year squeeze but zero-hour contracts at new high

Richard Partington Economics correspondent

18, Feb, 2020 @11:51 AM

Article image
UK pay growth outlook is 'among gloomiest in advanced economies'
Only Greece, Italy and Austria are forecast to suffer bigger falls in real wages by end of 2018, analysis finds

Katie Allen

10, May, 2017 @1:29 PM

Article image
UK to sink to the bottom of OECD wage growth index in 2018
British workers to be worse off among wealthy nations as Brexit inflation diminishes pay, TUC analysis show

Richard Partington Economics correspondent

29, Dec, 2017 @12:01 AM

Article image
Young and low-skilled workers hit hardest as 'underemployment' rises

TUC says 3.3 million people are 'trapped in jobs that don't have enough hours to provide the income they need to get by'

Dan Milmo, industrial editor

03, Sep, 2012 @11:05 PM

Article image
UK pay growth picks up as unemployment rate falls again
Living standards still face squeeze as earnings have failed to keep pace with rising inflation

Larry Elliott Economics editor

16, Aug, 2017 @3:48 PM

Article image
UK pay growth surges as employment hits record high
Average weekly earnings were up by 3.4% in November – the biggest rise since July 2008

Phillip Inman

22, Jan, 2019 @5:24 PM

Article image
Employment is high, skills are in demand. So why is pay still not rising? | Larry Elliott
UK living standards seem to be declining, as they did in the coalition years – but in very different economic circumstances

Larry Elliott

12, Apr, 2017 @12:49 PM

Article image
Brexit 'would leave British workers £38 a week worse off'
Leaving the EU would be a disaster for wages, jobs and employment rights, the TUC says

Angela Monaghan

31, May, 2016 @11:01 PM

Article image
UK wage growth stalls despite record employment
Rising vacancies and falling unemployment fail to push firms into raising wages

Phillip Inman

14, May, 2019 @10:15 AM