The latest employment figures suggest there is little spare capacity to meet employer vacancies.
The number of people in work increased to a record high proportion of the population between September and November, according to figures from the Office for National Statistics.
The figures show unemployment remained about level and the number of people aged from 16 to 64 years not working and not seeking nor available to work, such as stay-at-home parents and carers, decreased.
Unemployment was at 4% and average weekly earnings for employees in Great Britain in real terms (that is, adjusted for price inflation) increased by 1.1% excluding bonuses, and by 1.2% including bonuses, compared with a year earlier.
Meanwhile, the number of UK self-employed people has risen to 4.85 million, up 81,000 compared to the same time last year.
Tony Wilson, director of the Institute for Employment Studies, said: “With unemployment so low, vacancies at their highest ever and EU migration slowing, there is very little spare capacity to meet employer demands. In recent years, we’ve seen more people joining the workforce from “economic inactivity” – typically parents, older people and those with health conditions – but this is slowing fast, with fewer economically inactive people saying that they want a job than ever before. This lack of capacity may well be fuelling pay growth, and, in turn, may start to feed through into inflation.
“On the other hand, today’s numbers cover the jobs market as it was between September and November last year – so just before the crises which followed the Brexit withdrawal deal. It may well be that in the next few months’ releases we start to see vacancies and recruitment slowing down and some of the heat being taken out of the labour market. However, this doesn’t change the fact that we need to do more to increase labour market participation and raise productivity.”
He added that adjustments related to Universal Credit claimants raise questions about whether the new policy has had any impact on unemployment.
Andy Chamberlain, Deputy Director of Policy for IPSE which campaigns for the self-employed, added: “The amazing resilience of the self-employment figures is testament to the determination of these individuals to strike out on their own and work for themselves.
“Even amid the uncertainty caused by Brexit, people are still taking the plunge and starting their own business. Overwhelmingly, our members tell us that the flexibility offered by self-employment, and the freedom of working without a boss, are the main reasons why they wouldn’t choose to go back to being employees.”