Four percent fall in contingent workers amid record employment figures

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rear view of businesswoman looking at chart with sloping curve, dropping employment numbers concept

Figures released by the Office of National Statistics (ONS) on Tuesday showed a four percent drop in hiring independent contractors for temporary and contract work between May and June compared to the previous quarter, whilst full-time employment hit 32.78 million, the joint-highest level since records began in 1971, and an increase of 31,000 on the previous quarter’s level.

The number of self-employed individuals, such as those who work as a contractor, also fell by 15,000 from the previous quarter’s levels, although the amount of self-employed workers is still up by 126,000 year-on-year.

The rate of unemployment is at its lowest since October to December 1974, at 3.8 percent, pushing the number of job vacancies down by 23,000 to 812,000, the lowest level since November 2017.

The reduced labour supply correspondingly pushed up worker wages, which rose at the fastest rate for eleven years: a rise of four percent compared to the same period last year, and an annual rise of 2.1 percent in real terms.

However, with hiring confidence among employers at the lowest level for years, commentators warned that the record employment figures may suggest that the UK’s independent contractor labour market is finally running out of headroom.

“With Britain’s jobs boom slipping into the rear view mirror, the number of new jobs being created has slowed substantially; just 31,000 over the past quarter, a number so small it is within the statistical margin of error,” said Pawel Adrjan, UK economist at international job site Indeed.

“While there are still 812,000 jobs available, the total number of vacancies has been falling steadily since January, as employers – particularly small businesses – fret about the economic outlook.

“So, while it’s ‘steady as she goes’ on the jobs numbers, workers are reaping the dividends in their pay packets. Average wages rose by a relatively brisk 3.8% over the past year, driving inflation-adjusted salaries back up to within just a few pounds of their pre-crisis peak.

“On the recruitment front line, that battle for talent is still raging.  And with the economy clearly hovering at the full employment mark, wage inflation is likely to continue – unless and until a recession takes the wind out of employers’ desire to hire.”

Julia Kermode, CEO of The Freelancer & Contractor Services Association (FCSA), an industry body for umbrella companies and contractor accountants, said that the ongoing uncertainty surrounding Britain’s departure from the European Union (EU) has left employers with scant confidence to recruit independent contractor or other worker or staff.

“And, with temporary employment also down it is clear that employers are not even turning to temps to get them through.

“In contrast, self-employment is up year on year by 2.6% as businesses turn to the flexibility of self-employed people for help. Once again, it is the self-employed who are propping up UK business in a time of economic uncertainty, and the government should acknowledge their worth, not inflict more punitive measures and legislation on this group of workers.”

The low unemployment figures were attributed by the ONS to a record low in the number of women who are unemployed. The number of women in employment also hit a record high of 15.52 million, up 284,000 from the previous year.

The Minister for Employment, Mims Davies, said: “Wages are consistently rising faster than inflation – now for over a year-and-a-half – meaning we’re seeing a sustained boost in pay, supporting consumer confidence and giving a vital lift to millions of households who gain from greater financial security.

“This joint record employment rate and decades-low unemployment shows our labour market is booming. It’s especially pleasing to see continued record female employment at 72.1%, signalling the great strides we’ve made in empowering women in the workplace, whatever their background.

“There is still more to do. But today’s positive figures again show a thriving, diverse and resilient labour market to be proud of, and we are in great shape for Brexit on 31st October.”

Tom Hadley, director of policy and campaigns at the Recruitment & Employment Confederation (REC), commented:

“The UK’s labour market has been a key part of our economic success, and as today’s figures show, it remains in a strong position with a joint-record high rate of employment. But we cannot take this for granted. Business confidence is low, vacancy numbers are down and our own data shows that the continued uncertainty is starting to have an effect on placements.  The government must rule out a no-deal Brexit and help businesses carry on creating jobs and opportunity for people all over the UK.

“It was good to see the expansion of the Shortage Occupation, meaning businesses will find it easier to hire some skilled personnel from abroad. However, government must also acknowledge that we need lower-skilled and lower-paid workers to secure the UK’s future prosperity – not just the brightest and the best.”

David Freeman, head of labour worker market statistics for the ONS, said: “The employment rate has remained fairly constant at a joint record high for some months now, while the unemployment rate was last lower at the end of 1974.

“Vacancies continue to fall back from recent record highs, with much of this decline coming from small businesses.

“Including bonuses, wages are now growing at four per cent a year in cash terms for the first time since 2008.

“Once adjusted for inflation, they have now gone above two per cent for the first time in nearly four years.”

11th September 2019.