Employment up, but wages ominous

Sterling notes

UK Labour Market data released this morning show that the trend of rising employment and falling real wages is set to continue. At a UK-wide level, the decreases in unemployment are quite impressive, particularly for youth unemployment but figures for earnings at GB level paint a more sober picture. Regular pay in Great Britain was only up 0.6% from this time last year and with inflation running at about 2% this indicates a significant drop in real wages. We do not have reliable monthly earnings figures for Northern Ireland, only the Annual Survey of Hours and Earnings can report the extent of wage growth here. Interestingly there are indications that wages growth is stronger for those who have been in consistent employment for the last number of years. A lot of the weakness in wage growth may be due to compositional changes in the workforce i.e. people who have come back to work are in lower paying jobs than before. This has interesting implications for the recovery in the labour market in Northern Ireland as highlighted in a recent NERI working paper here.


For Northern Ireland, the unemployment rate has dropped to 6.7% in the three months ending in June from 7.2% in the three months till the end of March. This was also accompanied by a fall in the number of people economically inactive. However the rate of 6.7% is unchanged from the rate recorded in the three month ending in May, indicating less robust employment growth of late. Overall claimant count figures (a more accurate but imperfect measure of unemployment) broadly chime with figures from the Labour Force Survey (LFS). In the LFS, the number of young people unemployed remained unchanged at 20,000 from the previous quarter, but the rate of youth unemployment increased by 0.8% to 19.4% indicating a reduced population of young people in Northern Ireland. The youth claimant count also increased in July, but neither of these figures is seasonally adjusted, and unemployment figures could easily be inflated in the summer by those leaving full-time education.


Overall employment and unemployment figures are broadly positive, but wages remain a key concern and we will not know the extent of this problem in Northern Ireland until the end of the year.

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Paul Mac Flynn


Paul Mac Flynn is co-director of the Nevin Economic Research Institute and is based in the Belfast office. In addition to managing staff in the Belfast office he has co-responsibility for the NERI's research programme and for its strategic direction.  

He leads on the NERI’s analysis of the Northern Ireland economy along with all research into the impact of the United Kingdom‘s departure from the European Union. Other research areas include regional productivity, the all-island economy and the future of work.

He is a graduate of University College Dublin with a BA in Economics and Politics and the University of Bristol with an MSc in Economics and Public Policy, specialising in the economic impacts of political devolution in the UK.

Contact: [email protected] or 00 44 28 9024 6214.