EY ITEM Club: “UK unemployment rate to rise in 2018”

 

A new report from the EY ITEM Club is predicting that unemployment is set to increase, fuelled by a decline in the growth of jobs and employers adapting to a tightening labour market by making greater use of existing staff.

According to the report, the jobless rate is set to rise from 4.7% in 2017 to 5.4% in 2018 and 5.8% in 2019.

The report also predicts that while average earnings will increase by 2.75% this year, the prospects for real growth in pay, taking inflation into account, looks less bright.

EY, a leading globally integrated professional services organisation, has been sole sponsors of the ITEM Club for 25 years. They are the only non-governmental forecasting group to use HM Treasury’s model of the UK economy and their reports provide a detailed economic analysis and forecasts that are independent of any political, economic or business bias. 

The Group says that, as the supply of workers slows, employment will fall by 0.1% next year for the first time since 2009.

Martin Beck, Senior Economic Advisor to the ITEM Club, said "The UK labour market may be starting to become a victim of its own success. As the proportion of people in work has climbed ever higher, firms may have found it more difficult to fill vacancies, resulting in greater utilisation of the existing workforce and slower jobs growth."

He added: "On a positive note, slower growth in the workforce may deliver a boost to what has been a long period of insipid productivity growth. With the flow of potential workers slowing, firms are likely to have more incentive to invest in improving efficiency or labour-saving technology".

 

Tuesday, 16 May 2017

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EY ITEM Club: “UK unemployment rate to rise in 2018”