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May 2018 economic statistics: All the figures SMEs need to know

4 min read

05 June 2018

Deputy Editor, Real Business

Glancing back at May 2018, Real Business found that finding the right talent was one of the biggest corporate bug bears – for a variety of reasons.

Job site Indeed revealed in May that the majority of small businesses find it difficult to hire the right staff. The findings, which come as official figures show the UK’s employment rate is at its highest level since records began 46 years ago, suggest small companies are fighting a battle for talent.

Some 34% of 1,066 bosses can’t find suitable candidates for roles, with over half of respondents citing a perceived lack of job security as the main cause for struggling to attract applicants. No name recognition and an inability to offer the same perks as larger companies, were also cited as reasons they couldn’t find talented staff. Some even pointed to a drop in European nationals.

The ONS confirmed the latter sentiment, suggesting the European workforce within Britain has fallen by 28,000 over the last year. According to Jonathan Portes, professor of economics at King’s College London: “Labour market statistics show a year-on-year fall in the number of European nationals working in the UK, for the first time since the aftermath of the recession.

“This is due to a combination of factors – a slowing economy, combined with recovery on the continent and also the political and psychological impact of the Brexit vote – have made the UK a significantly less attractive place to live and work.”

The figures should by no means take away from the fact that the number of people in work has increased substantially. Access to staff, however, is peaking as “the labour market tightens”, said Seamus Nevin, the Institute of Director’s head of policy research. 

“Employers are finding it increasingly difficult to recruit the people they need,” Nevin explained. “Given that access to skills is currently one of the highest concerns for companies, the statistics highlight the imperative for government to reform the Tier 2 visa cap to allow employers to recruit the overseas workers they need to grow in the short term.”

And while employment rates are increasing, so too are real wages. Chancellor Philip Hammond exclaimed in May that it was actually outpacing inflation.

“Growth in real wages means that people are starting to feel the benefit of more money in their pockets; another turning point as we build a stronger, fairer economy. We can be proud of our record on jobs,” he said. “The unemployment rate is at its lowest in over 40 years and with our National Living Wage we are making sure that the lowest-paid feel the benefit with an extra £2,000 a year.

“Now the focus has to be on ensuring that wages keep rising faster than inflation, so that living standards increase.”

Of course, there are still lingering doubts. Stephen Clarke, senior economic analyst at the Resolution Foundation, claimed that “while the return to pay growth is welcome, it remains anaemic and wages are still over £700 a year lower than they were a decade ago. The stark fall in productivity in recent months suggests that a strong pay recovery remain some way off.”

Productivity – which the UK is known for lacking – took a downturn in May. It fell by 0.5%. Unfortunately, experts have chalked it up to the employment rate.

As was explained by Richard Heys, deputy chief economist of the ONS, the cause is “Continued strength in employment growth combined with weaker output growth.”