One of the surprises of recent years has been the way in which, despite disappointing growth, unemployment has continued to fall. Britain’s growth rate has halved since the peak in 2014 yet the unemployment rate has maintained its downward trajectory and is now at the lowest level in over 45 years.

This phenomenon is not unique to the UK. Germany’s growth rate fell away rapidly last year, bringing the economy close to recession, yet unemployment kept falling. Unemployment rates in the US and Japan are also at historic lows, despite slower growth.

Through most of the twentieth century unemployment was seen by policymakers as the central challenge facing economic and social policy. With unemployment in many Western countries at multi-decade lows policymakers these days are more preoccupied with low growth. Unemployment, long the scourge of Western economies, seems to have become yesterday’s problem.

Far from machines replacing people in the work place, it seems employers have favoured increasing employment over investing in machinery or technology. The appetite of major economies for labour has risen, driving unemployment rates down and bringing more older people, foreign-born workers and women into the labour market.

In the UK the participation rate of older workers, aged 55–64, has risen from 60% in 2008 to 68% today. Women’s participation rate, at 73%, has never been higher and is well above the EU average. Foreign-born workers account for more than 40% of the increase in employment since 2008, with EU workers making up the lion’s share of the growth. The Resolution Foundation notes that labour supply has also been increased as employees work longer hours to insulate themselves against what many see as a more volatile economic outlook.

Is the party coming to an end for the jobs market? There are some signs that the slowdown in the wider economy is starting to catch up with the labour market. Job vacancies have fallen 7% from their peak in December 2018. The Bank of England’s measure of corporate hiring intentions, based on reports from their regional agents around the country, has softened. In a sign that the labour market may be cooling people are changing jobs less frequently. And in April the NLW (National Living Wage) will rise by 6.2%, more than four times the rate of inflation, taking hourly earnings for over-25s to £8.72. So far significant rises in the NLW have had little discernible impact on jobs, but it is not without risks.

Yet in the absence of a sharp deceleration in GDP growth it is hard to see unemployment rising much this year. Government spending is on the rise and the public sector is hiring at the fastest rate in more than ten years. A post-election bounce in business sentiment and easy monetary policy are supportive of the jobs market. And, on the supply side, labour is getting scarcer. Britain’s withdrawal from the EU is likely to mark the end of a sustained period of rapid growth in the UK’s EU-born workforce.

Growth may have slowed but in the jobs market the balance of power seems to be edging away from capital to labour. Wage growth has picked up in tandem with a fall in inflation. Wages’ share of GDP is rising, while the profit share is falling. In the last ten years there’s been much talk of how well profits have done compared to wages. Now wages growth is putting pressure on margins.