- Job moves increasing as companies face dwindling labor pool
- Employment rate is 73.4%, highest in past four decades
U.K. companies are facing a declining pool of skilled unemployed and increasingly having to poach staff from other companies, in a trend that points to rising wage pressures.
In a new report, the Office for National Statistics said the number of unemployed has fallen since 2014 while job-to-job moves have risen. That follows a drop in the unemployment rate to 5.6 percent from 8.5 percent almost four years ago. The employment rate has risen to the highest in the past 40 years.
“This may suggest that employers are finding it increasingly difficult to hire skilled workers from the unemployed," the ONS said on Thursday. Unless the supply of labor increases, the increase in job moves “can be associated with greater pressure on wage inflation," it said.
Labor-market tightness, spare capacity and wage-growth pressures are key metrics for Bank of England policy makers as they consider when to begin removing emergency policy settings and raising the key interest rate from a record low. Governor Mark Carney and his eight colleagues on the MPC will digest a mixed economic picture as they prepare for their decision on interest rates next week. While wage inflation has picked up this year, a survey Thursday showed that services -- the largest part of the economy -- grew at the slowest pace in more than two years in August.
The ONS noted that calculating the degree of spare capacity in the economy is complicated by the shift in the composition of employment between the start of the recession and the most recent data.
One major change has been an increase in self-employed workers. That may reflect a shift in working patterns and the degree of slack may be reduced, putting upward pressure on wages; or, if self-employed workers prefer full-time employment, there could be more slack than headline figures suggest.