Jobs market is in a post-Brexit holding pattern – but change is coming next year on pay

Employment and pay growth have been flat for the last six months, but change is coming next year as rising prices start to eat into pay packets, the Resolution Foundation said today (Wednesday) in response to the latest ONS labour market figures.

The headline employment rate has now plateaued around record highs reached in mid-2016, while unemployment has been under 5 per cent since May. However, the Foundation notes that economic inactivity has now climbed by 76,000 in the past three months – a potential worry if more people are exiting the jobs market altogether.

Real pay growth is 1.7 per cent – the same as last month and in line with the year as a whole. However, rising inflation looks set to drag on pay growth in 2017, with a potential new pay squeeze coming in the second half of the year.

Laura Gardiner, Senior Policy Analyst at the Resolution Foundation, said:

“The second half of 2016 has been a remarkably quiet for the jobs market considering the wider economic and political upheaval.

“While employment looks like it is in a post-Brexit holding pattern, pay is more likely to change next year as inflation is expected to start rising steeply.

“Britain’s jobs market has been robust, but its pay and productivity record has been poor. Unless the country can turn its productivity woes around soon, Britain is at risk of a fresh pay squeeze next year.”