The number of people in work in the UK has hit a record high while the total unemployed is at its lowest for a decade, according to the latest official figures from the Office for National Statistics (ONS).The data also showed that the proportion of the workforce accounted for by non-UK nationals had increased over the past 20 years, from 3.8 per cent in 1997 to 10.9 per cent.ONS said that the number of non-UK nationals working in the UK in the last quarter of 2016 increased over the year by 233,000 to 3.48 million. The number of EU nationals increased by 190,000 to 2.24 million while those from outside the EU rose by 42,000 to 1.24 million.

Highest employment rate since records began

Overall, the total in work in the UK stands at more than 31.8 million, 300,000 more than a year ago and representing an employment rate of 74.6 per cent, the highest since records began in 1971.Meanwhile, unemployment has fallen by 7,000 to just below 1.6 million, retaining the country's jobless rate at 4.8 per cent, one of the lowest in Europe.David Freeman, senior statistician at the ONS, said, “Continued moderate growth in employment has led to a new high in the total employment rate, while the rate for women has reached 70 per cent for the first time on record. Overall, the labour market appears to be edging towards full capacity.”

Unemployment at lowest rate for a decade

The number on benefits also fell in January by 42,400 to 745,000, the largest monthly fall since 2013, while the total classed as economically inactive – which includes students, family carers, those on long-term sick leave, and people who have taken early retirement – has gone down by 31,000 to 8.8 million.Work and Pensions Secretary Damian Green said, “With employment at its highest rate since records began, and unemployment at its lowest in over a decade, we remain in a position of strength.“Our ongoing welfare reforms will continue to incentivise work and make sure the system is fair to all those who need it and those who pay for it.“With youth unemployment down, women in work at record levels and the number of disabled people in work increasing too, we're delivering on our pledge to build a country that works for everyone.”

'Inflation likely to move above growth in earnings'

The only disappointing news was that, in the year to December, average earnings increased by 2.6 per cent, 0.2 per cent down on the annual rate recorded in November. After inflation of 1.2 per cent over 2016 is taken into account, it means real wage growth over the year stood at 1.4 per cent – and, earlier this week, it was revealed that the annual inflation rate for the year to January had increased to 1.8 per cent.Howard Archer, chief UK economist with IHS Global Insight, said that inflation looked likely to move above growth in earnings this year, which would increase pressure on consumer spending.“Slowing earnings growth adds to the squeeze on consumers that is likely to increasingly weigh down on economic activity,” he said. “Indeed, consumers' purchasing power is now being markedly diluted.“We suspect that in a likely challenging environment, companies will increasingly look to hold down pay to try and limit their total costs as the weakened pound pushes up their input costs.”

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Related news:

• UK jobless total falls to lowest since 2006
• No sign yet of Brexit affecting booming UK jobs market
• Surprise drop in benefit claimants in wake of Brexit vote

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The Resolution Foundation think tank also believes the squeeze on wages will continue throughout 2017, with its latest pay projection suggesting that real pay growth will fall to around one per cent in March.Laura Gardiner, senior policy analyst at the Resolution Foundation, said, “Today’s figures show the jobs market remains robust, with employment reaching a new record high and inactivity starting to fall again.“However, 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.”For related news and features, visit our Enterprise section.Access hundreds of global services and suppliers in our Online Directory  Subscribe now to our Global Mobility Toolkit

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