Job vacancies have decreased and the uncertain economic outlook is impacting employment, as evidenced by a rise of 220,000 people seeking work between December and February.
Official figures indicate a slight increase in unemployment and a decrease in job vacancies for the ninth consecutive time, although more people are returning to the job market, leading to a rise in the employment rate.
The UK’s economy has been stagnant since spring 2022 due to various factors, including high energy prices, rising interest rates, and strikes. The number of business insolvencies in March 2023 surged to 2,457, a sharp increase from 1,784 in February, according to the Insolvency Service.
The Office for National Statistics (ONS) reported that inflation has remained at high levels of around 10%, while the latest earnings figures showed that pay growth is not keeping up with rising prices. Regular pay, which doesn’t include bonuses, grew by 6.6% between December and February.
Although the employment rate rose to 75.8% in the three months to February, the unemployment rate also increased to 3.8% from 3.7% in the previous quarter.
Furthermore, job vacancies declined for the ninth consecutive time as companies cited economic pressures for not hiring new staff. Additionally, regular pay fell by 2.3% when taking inflation into account, according to figures from the Office for National Statistics (ONS).
The ONS reported a decrease in job vacancies by 47,000 to 1,105,000 from the previous quarter between January and March, but highlighted that the figures still reflect a high level of vacancies.
According to Michael Stull, managing director of employment agency ManpowerGroup, employers are beginning to reduce their hiring demand, although he believes the job market is still in a robust state. He stated that more over-50s and young people are re-entering the workforce.
Daniel Ashville Louisy, director of Ashville Aggregates, a construction firm, stated that despite current high demand, many companies are postponing construction projects due to economic uncertainty. He added that rising wages were also putting pressure on profits.
Daniel Ashville Louisy, director of construction firm Ashville Aggregates, stated that wages have significantly increased, with labourers now earning the same as plumbers and carpenters were two or three years ago.
However, profits are being impacted as there is a lack of certainty, leading to firms putting construction projects on hold and not having the resources to hire new staff at higher wages.
Chancellor Jeremy Hunt stated that halving inflation this year is one of the government’s top economic priorities, in response to the latest figures which show that rising prices are impacting pay.
Meanwhile, shadow chancellor Rachel Reeves criticized the government for holding the UK back, resulting in lower wages, fewer people in work, and a lagging economy. Sarah Olney, Liberal Democrat Treasury spokesperson, blamed the Conservative party’s economic mismanagement for rising inflation and plummeting growth.
It’s important not to rely too heavily on a single set of data, but economists are surprised by the upward trend in pay increases across the economy. While it’s uncertain whether we’ll experience a major recession or a smaller downturn, the current economic challenges have only slightly impacted unemployment, meaning that it remains a favorable time to be job hunting.
Despite a slight dip from its peak, the average pay rise in the private sector stands at 6.9%, which is still among the highest in the past two decades. Even in the public sector, employers are offering higher wages, with a 5.3% increase in the year to February in an effort to address the ongoing recruitment crisis.
However, given double-digit inflation, workers in both sectors are facing some of the largest real-terms pay cuts since the 1930s.
Source : bbc.com