Responding to latest official labour market statistics, showing unemployment remained at a 45-year low of 3.8%, Tej Parikh, Chief Economist at the Institute of Directors, said:
“The labour market continues to be the UK economy’s strong suit, amid ongoing uncertainty.
“High employment has provided uplift to household incomes, which has supported the economy in a particularly challenging period. However, the booming jobs market has inevitably shown signs of losing momentum in recent months. As more and more people have entered work, businesses have found it harder to fill vacancies, and skills shortages are now clearly evident across all sectors.
“With wage growth outpacing inflation, individuals have seen their pay packets go further, yet with unemployment so low salaries could be even higher. Smaller businesses, which hire the lion’s share of the UK workforce, have been challenged by increased costs and stalling productivity, making it difficult for them to find margins and compete with even more attractive pay packages.
“The employment data has confounded expectations, but that must not lull policymakers into a false sense of security with serious work needed to upskill our workforce and to fine-tune our immigration policy in light of the talent shortfall facing the country.”