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Brexit and employment statistics: nothing to see here… (yet)

Nigel Meager, director of the Institute for Employment Studies, comments on today's ONS Labour Market Statistics:

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’The latest labour market statistics from ONS largely cover the period up to the end of June, and do not yet incorporate any potential impact from the referendum result.

'The figures are, in fact, very good, and show that the UK labour market entered the period of Brexit-induced uncertainty in pretty robust health. Unemployment (on the official indicator and the claimant count indicator) is down again, as is economic inactivity. The employment rate stands at a record high. Yet again the bulk of the most recent increase is due to further growth in self-employment (rapidly approaching five million), while total hours worked in the economy also rose. However, booming self-employment and longer working hours, when set against flat GDP data, continue to raise concerns about the UK’s labour productivity performance. 

‘The only serious sign of change in these data is a slight fall in vacancies, following similar falls in the preceding few months. Vacancies peaked in January 2016, after several years of strong growth, and the subsequent flattening off and fall suggest increasing caution in hiring on the part of employers in the run-up to the referendum. These figures, alongside the more recent survey soundings[1] from employers may represent the early signs of a major slowdown in recruitment behaviour. If so, this is likely to feed through into the employment statistics in the next few months.

‘The ONS data also show that the number of non-UK nationals working in the UK increased quite sharply by 242,000 in the year to June. It now stands at 3.45m. It is likely that a significant proportion of the employment growth the UK has experienced in the last year was accounted for by this growth in non-UK nationals working here, though the evidence that this has happened at the expense of UK workers is patchy. In the wake of the Brexit decision, however, there are signs that some sectors may be more vulnerable than others to an end to free movement within the EU and tighter immigration rules for foreign-born workers. Recent IES research looking at NHS nurses[2], for example, has suggested that many NHS Trusts in London and the South-East are reliant on non-UK, EU-born nurses at a time when demand for healthcare is rising. Other sectors such as agriculture, construction and hospitality may be similarly vulnerable.’

1 http://www.cipd.co.uk/research/labour-market-outlook.aspx
2 http://www.employment-studies.co.uk/news/new-ies-research-identifies-nhs-trusts-which-are-likely-be-most-affected-brexit

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