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What does low unemployment mean for you?

Kate Allen, Managing Director, Allen Associates

According to the latest reports from the Office for National Statistics (ONS), employment is at a record high of 74.6 per cent. That’s over 31.85 million people in work – an increase of 2.8 million since 2010.

Unemployment is just 4.7 per cent. It’s not been this low since 1975, and long term unemployment is at its lowest since before the 2008 recession.

So what does this mean for recruitment? Kate Allen, managing director at Allen Associates, explores some of the possible implications for employers and job seekers and shares her thoughts on the pros and cons. 

In the three months to February 2017, 88.2% (668,000) of job vacancies came from the services sectors predominantly in wholesaling, retailing and repair of motor vehicles (142,000) as well as human health and social work (120,000).

The increase in employment is higher for women, partly due to ongoing changes to the State Pension age for women resulting in fewer retiring between the ages of 60 and 65.

The good news is that the rise in employment continues to be driven by full-time work with the average weekly wages growing by 2.2% over the last year and this is set to continue. The Recruitment & Employment Confederation (REC) reports that:

  • 59% of companies have increased their headcount in the last year
  • 1 in 5 hirers (22%) plan to take on more permanent staff in the medium term (4 to 12 months)
  • Only 1% of companies are planning to decrease their headcount
  • A third (34%) believe that UK economic conditions are improving, while 29 per cent think they are getting worse
  • Almost 8 in 10 (78%) are operating with ‘none’ or ‘a little’ spare capacity, and would need to take on staff to meet an increase in demand

So, what does this mean for employees and potential job seekers?

The bad news for employees is that people are also working longer hours both in full-time and part time employment. For the three months to January 2017, the ONS shows that people worked, on average, 32.3 hours per week (37.7 hours full time and 16.3 hours part time employment). This is more than for August to October 2016 and slightly more than for a year earlier. Long hours in the wrong environment can push people to look for change.

But it is today’s candidate driven world which puts job seekers at an advantage. Those looking for a new role have the opportunity to negotiate for better, or more flexible hours. If you are thinking about making a move, it may be worth reading my earlier blog: Three questions to ask before you make your next career move

And for employers?

Worryingly, 51% of employers anticipate a shortage of candidates to fill permanent jobs, according to the REC; employers with more than 250 staff are particularly concerned about the lack of talent available, with 63% expecting it to be an issue.

Employers expect the shortage of candidates to be particularly acute in engineering and tech, health and social care, and construction. This is not seen as a new problem but many feel that the fall-out from Brexit has created fresh challenges.

On the other hand, the fact that we have the highest number of people in work for 32 years is clearly something to be celebrated. But it is important that the jobs and company cultures on offer give real fulfilment and opportunity for existing and new employees to grow and remain loyal. My previous blog Is your business struggling to find the staff it needs gives you some hints and tips on how to improve your company’s appeal to employees.

Focussing on creating a winning culture will make businesses more attractive to candidates who in turn will be happier, more engaged, more productive and much more likely to stay longer. Most importantly, in today’s market, it also provides a much needed competitive advantage.

Source: Labour Force Survey: Office for National Statistics

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