Gerwyn Davies, Labour Market Adviser at the CIPD, the professional body for HR and people development comments on the ONS Labour Market Statistics.

Today’s employment and pay figures show a continuation of recent trends, but mask some important changes.  The growth in the number of EU nationals in employment has slowed to a trickle during the past quarter following previously strong growth; which could be the first tentative sign that the UK’s vote to leave the EU is already starting to stem the supply of EU migrant labour, before any formal restrictions are introduced as a result of the UK’s eventual exit from the EU.  Employers therefore need to respond now by investing more in skills and reviewing their resourcing channels and retention methods to offset the risk of looming labour shortages.

The figures also show that employment growth is also showing signs of cooling. Employment rose by just 49,000 in the previous three months, which suggests that employment levels have actually fallen very modestly during the past month. While wage growth remains stable at just above two percent, CIPD research suggests there is likely to be downward pressure on wages over the coming year, partly because a weaker pound will increase costs for many businesses and partly because of a rise in employment costs as a result of the introduction of the national living wage, pension auto-enrolment and the forthcoming apprenticeship levy.  This could lead to a return of the ‘squeezed middle’ phenomenon, with star performers and National Living Wage recipients the key beneficiaries.