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CIPD - Number of non-EU born workers in employment surges due to tightening labour market for skilled workers in permanent, full-time jobs

The CIPD responds to the official labour market statistics for the period January – March 2019 published by the Office for National Statistics (ONS)

Just over a third of the 364, 000 net annual increase in the number of people in work over the past year has gone to people from outside the European Union. While the number of EU-born citizens in work has also recovered recently according to the latest official labour market statistics. The number of non-EU born citizens in employment has increased by 123, 000 during the past year. While the sharp quarterly increase of more than 117, 000 EU-born citizens in employment means there is a low annual increase of 58,000.

The data also shows that pay growth is showing tentative signs of softening despite strong employment. Average weekly earnings growth, which has been increasing relatively sharply over the past two years, has fallen modestly for the second consecutive month. However low inflation has ensured that real pay growth remains constant at 1.5%. A prolonged stretch of inflation beating wage rises is putting more money in people's pockets.

Gerwyn Davies, senior labour market analyst for the CIPD, the professional body for HR and people development, said:

"It is easy to see why employers have turned to non-EU workers in relatively large numbers against the backdrop of a tightening labour market. What’s more, contrary to some recent reports, virtually all of the employment growth during the past year has come from skilled, permanent, full-time jobs. This has allowed employers to largely overcome the restrictions they encounter when recruiting non-EU workers that do not currently apply to EU workers. Non-EU workers are therefore playing a key, complementary role in the UK workforce; especially in sectors such as healthcare. Looking ahead, the data may herald a structural shift towards hiring more non-EU workers when restrictions are loosened for non-EU workers and tightened for EU workers from 2021."

Davies continues: "The relatively sharp growth in the number of non-UK born workers in employment has also acted as a brake on salaries rising more quickly; especially in shortage occupations. This will come as a relief to employers who have been subjected to increasing pressure from workers to raise pay without accompanying productivity growth. Therefore, unless more firms are prepared to take hit to profits, the prospects for a further boost to earnings growth seem slim without a wider adoption of management practices and technological improvements."

Labour market overview, UK: May 2019

Original article link: https://www.cipd.co.uk/about/media/press/ons-response

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