As we draw ever closer to 31 October, when the UK is scheduled to leave the European Union (EU), headlines about the economic impact of a no-deal Brexit are becoming an almost daily occurrence. Concerns are increasingly being voiced of a looming recession and its inevitable impact on pay and employment.
The Office for National Statistics’ (ONS) Labour market statistics for the period April to June 2019, published earlier this week, suggest that some organisations are beginning to exercise caution ahead of the UK’s exit from the EU, with the number of vacancies shrinking. Yet, despite this, employment levels have continued to rise, particularly among specific groups such as the over 50s, migrant workers and the self-employed.
Wage growth tells a similarly positive story. The ONS’ report Average weekly earnings in Great Britain: August 2019, also published this week, showed that total pay for employees in the UK, including bonuses, rose by 1.8% in real terms during the reporting period between April to June 2018 and April to June 2019. Regular pay that excludes bonuses, meanwhile, increased by 1.9% for the same reporting period. Overall, the annual growth in average weekly earnings for UK employees has improved by 3.7% in terms of total pay, inclusive of bonus payments, compared to a 3.9% growth rate for regular pay, which does not take into account bonus awards.
The ONS attributed this rise to improvements in the national living wage and the national minimum wage from April 2019. Competition for talent has also helped to drive up pay levels.
The buoyant labour market and organisations’ demand for talent are also driving employers’ expectations for pay strategy for the coming year. According to research by the Chartered Institute of Personnel and Development (CIPD), also published this week, just over a third of respondents expect to implement a basic pay increase of between 2% and 2.99% in the year to June 2020. A further 36% predict that their basic pay awards will increase by more than 3% in the coming year.
However, these reports come alongside proposals from think tank the New Economic Foundation to raise minimum wages for the lowest-paid in the UK, as well as to increase paid statutory holiday entitlement, in order to boost productivity.
How robust the labour market ultimately proves to be, and whether these predictions come to fruition in the coming months, remains to be seen. As it stands, the employment market appears to be in a strong position for the potentially testing times ahead.