Wages on rise as employment at its highest since records began!

Wages grew at their fastest pace in a decade in the three months to October and the number of people in work has reached a record high, official figures show.

Regular pay, excluding bonuses, grew by an average of 3.3 per cent in the period, up from 3.2 per cent in the three months to September, according to the Office for National Statistics. After adjusting for inflation, regular wages grew 1 per cent in the October period, a level not reached since the final quarter of 2016. Wages have been growing faster than inflation for nine months.

After a decade of wage stagnation analysts said that the tightness of the labour market was beginning to cause sustained pay growth and that consistent rises in real wages were possible. Stephen Clarke, senior economic analyst at the Resolution Foundation, said: “2019 looks set to be a far better year for pay than this one. But after a pretty appalling decade, Britain remains some way off a return to the levels of real pay we enjoyed before the crash.

“While Brexit uncertainty and political paralysis are having a cooling effect on the wider economy, the labour market is proving more resilient. Britain’s tightening jobs market is delivering stronger pay rises, particularly for workers in ICT, hospitality and real estate.”

The job market remains strong, with employment reaching 75.7 per cent, the highest since records began in 1971. The number of people in work grew by 79,000 to 32.4 million in the three-month period, while unemployment rose by 20,000 to 1.38 million, which remains 49,000 lower than a year ago.

It was the second month running that unemployment rose even with vacancy levels close to a record high. Economists have said that the combination of a high vacancy rate and rising numbers out of work is a sign of skill shortages. The unemployment rate was unchanged at 4.1 per cent, above the 43-year low in August of 4 per cent.

Economic inactivity, which measures the number of people neither working nor seeking work, fell from 21.5 per cent a year ago to 21 per cent. There were an estimated 8.66 million economically inactive people in Britain during the period.

Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, said that the further rise in wage growth had strengthened the case for the Bank of England to raise interest rates at the earliest opportunity after the threat of a no-deal Brexit had disappeared.

“The [monetary policy committee] needn’t panic and raise the bank rate while the economy is visibly slowing due to the risk of a disastrous no-deal Brexit next year. A May rate hike, after a no-deal Brexit likely has been averted, remains a good bet,” he said.

Alok Sharma, the employment minister, said that the latest figures pointed to “the enduring strength of our jobs market, with wages outpacing inflation for the ninth month in a row”. He added: “This is benefiting people across the country, with almost 400,000 more people in work in the last year, putting more money in the pockets of working families, and showing that the UK remains a great place to invest and do business.”

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Foreign exodus leaves skills shortage before Brexit

Employers planning to take on staff are being hit by a skills shortage because of an exodus of foreign workers, a survey has found.

The jobs market is in the throes of a “supply shock”, with the flight of adults born outside Britain highlighting the dearth of skilled workers in many key sectors, according to research from the Chartered Institute of Personnel and Development and Adecco, the staffing company.

Seven in ten employers have had difficulties filling vacant positions, with two out of five warning that recruiting the right people has become harder over the past year, according to the survey of more than 1,000 companies.

Uncertainties around Brexit and the drop in the value of the pound in the aftermath of the 2016 referendum have been blamed for a reduction in the number of foreigners working in the UK. The number of workers in Britain who were born abroad decreased by 58,000 between the second quarters of 2017 and 2018, compared with an increase of 263,000 over the previous 12-month period, according to the institute’s report. The fall has been driven primarily by a drop in the number of migrants from outside the European Union, it said.

“The labour market in the UK is tight and this research is reporting increasingly high levels of recruitment and retention difficulties. While the data is not showing wages rising across the board, we are regularly seeing this pressure being exerted in the recruitment space,” Alex Fleming, who runs Adecco’s British division, said.

The report warned that the labour supply could be further “constrained” from 2021, when migration restrictions for EU citizens would be introduced under present Brexit plans. A third of employers polled by the institute said that the administrative burden of extending the points-based visa system used for non-EU citizens to European workers would be “too great”.

Separate data from Indeed, a job-hunting website, found that non-European jobseekers looking for skilled jobs in the UK outnumbered Britons by as much as fifteen to one for some roles, including IT consultants, research fellows and developers.

The numbers of EU and non-EU jobseekers searching for skilled jobs in Britain has remained stable this year, its research found, with one in ten enquiries for British technology jobs coming from jobseekers abroad.

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Firms may have to check EU citizens’ right to work

Employers may have to check whether EU citizens have the right to work in the UK if there is a no-deal Brexit, the immigration minister disclosed yesterday.

Caroline Nokes admitted, however, that firms would not be able to differentiate between EU citizens who are new arrivals and those who have been in the country for years with a right to work and the entitlement to stay.

The government wants the estimated 3.5 million EU citizens in Britain to apply for settled status so that they can continue to live and work here but that will not happen by the time Britain is due to leave the bloc next March.

“If somebody has been through the settled status scheme they would be able to evidence that,” she said. “If somebody hasn’t been here prior to the end of March next year, employers will have to make sure they go through adequately rigorous checks to evidence somebody’s right to work.

“It would pose a challenge to government and indeed employers in differentiating between those two groups of people.”

In a difficult evidence session at the home affairs select committee, Ms Nokes was repeatedly asked what the checks would be. She offered to clear up any confusion in a letter to the committee.

The immigration minister said that an immigration bill would “turn off free movement” once Brexit happened and remove the automatic right of EU citizens to live and work in Britain. Ms Nokes added that in the event of no deal new immigration controls would apply to EU citizens arriving in the UK next year.

She said that determining people’s status would be tricky during the planned two-year transition period, whether or not a deal was agreed. Even if there is no deal, EU citizens will still have until March 2021 to apply for settled status.

Mike Spicer, of the British Chambers of Commerce, said that the issue of checks was a source of serious concern for companies. “Businesses can’t plan on the basis of warm words; they need to see written in black and white directions from the government about how exactly this scheme will operate.”

Satbir Singh, of the Joint Council for the Welfare of Immigrants, said: “Employers [have been told to] check EU nationals’ ‘paperwork’ to determine their right to work after Brexit, despite the fact that no such paperwork exists.”

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Wages grow (3.1%) at fastest rate in a decade — and beat inflation

Wages have risen at the fastest pace in almost ten years, easing the pressure on UK households.

Earnings, excluding bonuses, increased by 3.1 per cent in the three months to August compared with a year earlier, according to the Office for National Statistics.

The rise outstripped the growth of 2.9 per cent in the three months to July and the 2.6 per cent forecast by economists.

Hopes were raised last week that a “lost decade” of pay growth after the financial crisis was finally over when Andy Haldane, chief economist at the Bank of England, said that there was “more compelling evidence of a new dawn breaking for pay growth, albeit with the light filtering through only slowly”.

The earnings data came alongside jobs figures which showed that the unemployment rate held steady at 4 per cent, a four-decade low. The overall figure fell by 47,000 to about 1.36 million. Economists said the “tightness” in the labour market was finally creating pressure to increase wages.

Thomas Pugh, UK economist at Capital Economics, said: “Surveys of wage growth suggest that it will sustain a pace of about 3 per cent year-on-year over the remainder of 2018.”

However, the boost to households’ spending power was tempered by inflation. The consumer price index measure of inflation was 2.7 per cent in the three months to August. Figures for September are released today.

Experts also said the pay growth was likely to be concentrated among new starters, key staff and recipients of the national living wage, unless productivity growth improved. The CBI said that weak productivity remained the “UK economy’s Achilles heel”.

Mr Pugh added: “Nonetheless, we expect real wage growth to increase over the next year which should lift consumer spending and feed through into an acceleration in GDP.” The Resolution Foundation, an economics think tank, said inflation meant that real pay growth remained at 0.7 per cent compared with a “norm of over 2 per cent before the financial crisis”.

Suren Thiru, head of economics at the British Chambers of Commerce, said: “Achieving a meaningful improvement in wage growth will be an uphill struggle unless the underlying issues that continue to limit pay settlements are tackled — notably sluggish productivity, considerable underemployment and high upfront costs for businesses.”

Mr Thiru also said that with the number of job vacancies close to record highs, there were signs of a skills shortage. “Companies are reporting that recruitment difficulties have reached critical levels, which coupled with Brexit uncertainty is increasingly putting employers off trying to hire, and if sustained could increasingly weigh on jobs growth.”

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Amazon’s virtual recruiter had a grudge against women!

Amazon inadvertently built itself a sexist recruitment assistant in a failed experiment that demonstrated why artificial intelligence does not necessarily lead to artificial wisdom.

The company set out to create a virtual hiring tool that would sift thousands of job applications far more efficiently than people can. Unfortunately, the AI algorithm taught itself to discriminate against women based on the fact that many more men had applied for and got jobs in the past.

The new system began to penalise CVs that included the word “women’s”, as in “women’s chess club captain”. It downgraded applications sent by graduates of two all-female universities and prioritised applications that featured verbs more commonly found in male engineers’ CVs, such as “executed” and “captured”.

The company tinkered with the software to remove this bias but was unable to guarantee that no other discriminatory sorting procedures had crept in. The team working on the project was disbanded last year and said that Amazon recruiters looked at the recommendations generated during the trial but never relied exclusively on those rankings. The tool was “never used by Amazon recruiters to evaluate candidates”, the company said.

Amazon began building computer programmes to review job applicants’ CVs in 2014. “Everyone wanted this holy grail,” one source told Reuters. “They literally wanted it to be an engine where I’m going to give you 100 résumés, it will spit out the top five, and we’ll hire those.” However, not only did the AI teach itself gender bias, it would also often recommend unqualified candidates for inappropriate jobs.

Nihar Shah, who teaches machine learning at Carnegie Mellon University, said: “How to ensure that the algorithm is fair, how to make sure the algorithm is really interpretable and explainable — that’s still quite far off.”

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Sick days at record low as worried workers battle on

The days of calling up the boss to cough down the line and weakly say you are too ill to come into work before lying in bed with daytime television are over.

The Office for National Statistics said that the number of sickness days had almost halved over the past two decades to reach a record low. It dropped from an average of 7.2 days in 1993 to 4.1 days in 2017 and had been steadily falling since 1999. The total days lost for all workers last year was 131.2 million, down from 137.3 million in 2016 and 178.3 million in 1993.

Some employment groups have argued that this fall damages the economy because it suggests workers worried about job security are still coming into work even when ill, lowering their productivity levels.

In May the Chartered Institute of Personnel and Development reported that the number of companies reporting a rise in employees going into work when they were ill had more than tripled since 2010 and warned that organisations should do more to discourage “presenteeism”.

The ONS acknowledged that there may be an increase in people going into work even when they are ill, but added that the fall could also be due to our healthy life expectancy improving.

The figures also showed that the average number of sick days taken in the private sector is much lower than in the public sector, suggesting that these workers are avoiding sick days as they are at risk of not being paid.

The sickness absence rate, which measures the working hours over the year that are lost to sickness, stands at 2.6 per cent in the public sector and 1.7 per cent in the private sector.

The ONS said: “Higher sickness absence in the public sector is partly explained by the profile of the workforce: it employs more older people and women, both of whom tend to have higher rates of sickness absence; it is more likely to employ staff with a long-standing health condition who are more likely to go off sick and tends to offer more generous sick pay arrangements.”

Since the financial crash, sickness absence rates have declined by 0.5 percentage points to 1.9 per cent last year.

Coughs and colds remained the biggest cause of people taking time off work, making up 26.2 per cent of days lost through sickness absence last year, which equates to about 34.3 million days.

However, the figures also found that there was a rise in young workers aged between 25 and 34 who took time off with mental health problems — the rate in this category rose from 7.2 per cent in 2009 to 9.6 per cent last year.

Women were more likely than men to cite mental health conditions as the reason for being off sick, at about 8.1 per cent of women compared with 5.7 per cent of men. The ONS said that this might be because men were less likely to seek medical help for mental health problems than women.

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Employers get inside your mind by asking if you have an imaginary twin!

Some of Britain’s biggest companies and government departments have started using a new form of “deep” psychological profiling to assess job applicants.

The online assessment asks candidates a series of questions such as “Have you ever had an imaginary twin?” in order to uncover “subconscious latent potential” and weed out job hunters who look good on paper but may perform less well in the office.

The developers say that the 30-minute questionnaire can also reveal underlying motivations and mental health problems.

It asks more than 50 questions, including “When you have done something well, who do you want to know?” and “Remember the moment when you first lost out to a rival. What did you do?” It also examines how people handle conflicts with their family, friends and partners. The researchers say that talking about an imaginary twin allows people to provide insights about themselves that they may otherwise have chosen to keep hidden.

Curly Moloney, one of the founders of The Cambridge Code, said: “Each question tells us a small thing but when put with other answers it becomes a small jigsaw piece in a big picture.”

She added that the test could pick up traits such as inner drive, which does not usually become apparent until after several months in the job. She also believes it can help women in particular.

“I’ve come across many female chief executives who are great at running a company, but don’t interview well,” she said. “I think this is why a lot of women don’t end up on boards, even though they would be very good at it.”

The team created the test after analysing responses and tracking the careers of more than 10,000 people. “The tool is proven to uncover the subconscious latent potential and wellbeing present in all of us, but lies beyond the reach of established psychological measurement,” the company’s website says.

The company says that the test helps to show how flexible and resilient candidates are, their drive and potential and how they deal with authority, which are necessary skills in the modern workplace but are hard to uncover in interviews. It also seeks to establish how good applicants are at managing people and dealing with rivalries.

“To make it to the top of an organisation or a senior leadership role, an individual needs to be able to make tough decisions and to have the capacity to live with the consequences of their actions. In most individuals this element of ‘steel’ or ruthlessness is contained but can flash when necessary,” the company says.

The Cambridge Code does not reveal which companies use its techniques but Dr Moloney says she has worked with a third of FTSE 100 companies as well as governments at home and abroad. The company hopes that the test will also be used in doctors’ surgeries to give a rapid assessment of mental health conditions in patients.

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Wages fail to match booming job market in puzzle for economists

Employment hit a record high and joblessness stayed at a 43-year low in the three months to May, but earnings growth slowed as the labour market continued to confound convention.

The weakness in wage growth, which dipped from 2.6 per cent in April to a six-month low of 2.5 per cent, is unwelcome, but economists said that it was unlikely to deter the Bank of England from lifting interest rates next month.

Markets are pricing a 75 per cent chance of a quarter-point rise to 0.75 per cent in August, which would be the first time that rates have been above 0.5 per cent since March 2009.

Surging jobs growth has been one of the strongest features of Britain’s recovery since the financial crisis, but the wage growth that is meant to accompany low unemployment has yet to appear, baffling observers.

The number of people in work has risen by 137,000 since February to 32.4 million, with the employment rate hitting 75.7 per cent, the highest since comparable records began in 1971, the Office for National Statistics said. Unemployment fell by 12,000 to 1.41 million and the jobless rate remained at 4.2 per cent, its lowest since 1975.

There was little evidence of the jobs boom slowing. The number of vacancies, that is advertised jobs that need filling, was put at 824,000, up 7,000 and at a record high.

Tej Parikh, senior economist at the Institute of Directors, said that although the figures underscored the resilience of the labour market, “sub-par wage growth remains a sting in the tail”. He said that pay was struggling to keep pace with record levels of employment, in part because of heavy cost pressures and weak productivity growth.

Ian Brinkley, acting chief economist at the Chartered Institute of Personnel and Development, said: “The labour market continues to deliver on jobs, but there are a number of underlying weaknesses.

“Much of the job growth has been for part-time work and, as a consequence, total hours worked in the economy have fallen slightly.”

The additional jobs were all full-time positions, but the ONS data showed that the average working week for full-time employees had been cut by 0.3 hours to 37 hours. Total hours worked fell by 300,000 to 1.03 billion between February and May. The drop may have been related to age.

“More than half of the quarterly increase in employment came via the 50 to 64-year-old age cohort,” George Buckley, an economist at Nomura, said.

The economy appears to be picking up after a slow first three months of the year because of the unusually cold weather. The Bank of England is now worried about the impact on inflation. Mark Carney, the governor, said this month that both the economy as a whole and pay were growing, as the Bank had forecast in May, smoothing the way for an August rate rise. Sir Jon Cunliffe, a deputy governor who opposed November’s rate rise, said last week that pay growth did not seem to be breaking out of its recent 2.5 per cent to 3 per cent range. The Bank’s projections suggest that wages will become inflationary above 3 per cent.

Victoria Clarke, at Investec, said that the Bank would “feel the need to move forward with gradual rate rises as it eyes a pick-up in domestically generated inflation”.

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Lorry drivers aren’t in it for the long haul any more!

Britain’s haulage industry is “sleep-walking” — or perhaps that should be sleep-driving — into a shortage of drivers because of an ageing and increasingly unhealthy workforce, putting the health of the economy at risk.

According to the Unite union, the industry’s failure to recruit younger workers means the average age of a large goods vehicle driver has increased from 45.3 years in 2001 to 48 in 2016, with 13 per cent aged over 60 and only 1 per cent under 25.

Unite says the skills shortage is likely to be exacerbated by Brexit as many British haulage firms have become reliant on eastern European drivers. It quotes figures suggesting that between 43,000 and 60,000 of the UK’s 250,000 drivers are from the European Union.

It cites “incredibly high” levels of injury and ill health as a big factor, the main issues being musculoskeletal problems, stress, depression and anxiety. It said research showed that long-haul driving, in particular, was causing unhealthy lifestyles with obesity, high blood pressure, lack of sleep and diabetes all commonplace. Unite said the health problems could be a contributory factor to drivers falling asleep at the wheel. In April, a confidential survey by the union of its heavy goods vehicle drivers found that 29 per cent admitted to having fallen asleep at the wheel.

Adrian Jones, Unite’s national officer, said that to recruit new drivers and retain existing workers the industry needed to have “a long hard look at itself and end the race to the bottom attitude . . . on pay and conditions”.

Unite said the problems were set to increase due to European Union rules that will see maximum driving times increased and minimum rest times cut.

Sally Gilson, from the Freight Transport Association, said: “It’s important for logistics that we reach out and work to attract young people into the sector. We need to show that there are clear career opportunities and long-term prospects in logistics.”

She said there needed to be a change in the way drivers were looked after on the road, where facilities are poor. “A toilet, somewhere to eat, and a safe place to park is a very basic need and even that is difficult to find in some regions,” she said. “To attract young people and take care of the health of our older drivers, facilities need to provide healthy food options, clean toilets and showers, areas where people can socialise, free Wi-Fi and somewhere to exercise.”

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Thousands opt out of pensions after sharp rise in contributions

Thousands of low and moderate earners are opting out of pension saving as they struggle to make ends meet after a sharp increase in deductions from their pay packets was introduced in April.

The underlying opt-out rate has risen from 7.98 per cent to 8.18 per cent in the past two months, according to Now Pensions, the first big auto-enrolling master trust to disclose the impact of the contribution changes.

The increase in employee deductions has been seen as a key test for auto- enrolment — the government’s campaign to “nudge” millions of low earners into pension saving for the first time.

Auto-enrolment is seen as a success, with about nine million people starting to save for the first time since 2012, when it began to be phased in. However, the initial employee contribution was set at only 1 per cent of qualifying earnings, defined today as earnings in excess of £6,032, leading to concern that more people would opt out when the rate was tripled from April.

Now Pensions, an offshoot of the Danish state pension scheme, runs auto-enrolment schemes for 30,000 employers in the UK, most of them small businesses but also a handful of larger ones, such as Fitness First, the gyms group, and Cineworld, the cinemas chain.

The company, which is one of the biggest platforms with 1.75 million saving customers, said that 23,800 people had opted out in the two months since deductions had been raised. That was 1,750 more people than it would have expected if the opt-out rate had remained at the previous year’s level, according to Adrian Boulding, head of policy at Now Pensions.

The opt-out numbers include new recruits to client employers who bale out from the pension scheme in the first six weeks of their employment, as well as existing employees previously enrolled in the scheme who change their minds.

“A small number of people have been deterred by the increase in deductions, but the numbers demonstrate that the vast majority are sticking it out,” Mr Boulding said.

Another test of auto-enrolment comes next April, when the minimum employee contribution is due to rise to 5 per cent. Minimum employer contributions were raised from 1 per cent to 2 per cent in April and will be raised to 3 per cent next April.

The squeeze on real incomes over the past year, as inflation overtook wages growth, was another reason that the increase in deductions could have pushed more low earners to opt out.

Two factors softened the blow for many low-paid employees. One was the 4.4 per cent rise in the national living wage from £7.50 an hour to £7.83 in April. The other was a rise in personal allowances for income tax and national insurance from April.

Separate data yesterday from the Department for Work & Pensions showed that the percentage of eligible employees participating in a workplace pension scheme was 84 per cent last year, up from 77 per cent in 2016. However, the proportion saving most of the time has fallen. The percentage saving in at least three of the past four years fell from 77 per cent to 73 per cent.

There were huge improvements in the participation rate in hotels and restaurants, up from 27 per cent in 2012 to 77 per cent, and in farming and fisheries from 44 per cent in 2016 to 68 per cent.

All employees over the age of 22 have to be enrolled in a workplace scheme of minimum standards and must opt out to avoid having their pay deducted.

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