Job vacancies across Britain have fallen for the eighth month in a row, as businesses hold back on recruitment amid economic pressures, new data show.
According to the latest figures from the Office for National Statistics (ONS), Britain’s unemployment rate remained unchanged at 3.7 percent in the three months to January.
The ONS said the fall in vacancies “reflects uncertainty across industries, as survey respondents continue to cite economic pressures as a factor in holding back on recruitment.” Pay Remains Under Pressure The latest figures revealed that pay remained under pressure despite declining inflation, while the data showed that wage growth has eased back sharply.
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The ONS said total wages including bonuses lifted by 5.7 percent in the three months to January, with regular wages, excluding bonuses, increasing by 6.5 percent.
This was lower than the 6 percent growth for total pay and 6.7 percent for regular pay seen in the previous quarter.
With Consumer Prices Index (CPI) inflation taken into account, real regular pay fell by 3.5 percent and total pay including bonuses was 4.4 percent lower.
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Darren Morgan, director of economic statistics at the ONS, said: “Although the inflation rate has come down a little, it’s still outstripping earnings growth, meaning real pay continues to fall.
The figures also showed there were 220, 000 days lost to strike action in January, down from 822, 000 in December, with schools the hardest hit. Labour Shortages The ONS said the rate of economic inactivity eased back to 21.3 percent in the quarter to January from 21.5 percent as more young people returned to work amid the cost-of-living crisis.
There were 65, 000 more people in employment quarter-on-quarter in the three months to January at 32.8 million, while the number of unemployed rose by 5, 000 to 1.3 million, according to the ONS.
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Morgan said: “The number of people neither working nor looking for a job fell overall, driven by a drop in young people. However, a record number of people were completely outside the labour market due to long-term sickness.”
Chancellor of the Exchequer Jeremy Hunt (right), with Energy Secretary Grant Shapps, speaking at a meeting of senior leaders from across UK green industries at Queen Elizabeth Olympic Park, east London, on Feb. 21, 2023. (Stefan Rousseau/PA Media)
The data come ahead of the Spring Budget on Wednesday, when Chancellor of the Exchequer Jeremy Hunt is expected to announce ways to encourage older workers back into the jobs market to help with the UK’s shrinking workforce.
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Tackling economic inactivity is a key component of Hunt’s plans, as employment numbers have languished far below their pre-pandemic levels, harming the UK’s already-struggling economy.
Commenting on the figures, the chancellor said: “The jobs market remains strong, but inflation remains too high. To help people’s wages go further, we need to stick to our plan to halve inflation this year.
“Tomorrow at the Budget, I will set out how we will go further to bear down on inflation, reduce debt, and grow the economy, including by helping more people back into work.”
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Jonathan Ashworth, Labour’s shadow work and pensions secretary, said: “The Tories’ abject failure to support people back to work means there are 234, 000 fewer people in employment than before the pandemic.
“While other major economies have bounced back, Britain is languishing under the Tories and families are paying the price.” Interest Rates Despite the recent signs of easing, the UK’s inflation rate has remained in double digits.
Last month, the Bank of England, the UK’s central bank, raised interest rates for the 10th time in a row, hiking the base rate from 3.5 to 4 percent to help bring down inflation.
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But according to experts, the slowdown in wage growth takes the pressure off the Bank of England to raise interest rates again next week, especially in light of the turmoil sparked by the collapse of Silicon Valley Bank and another U.S. lender at the weekend.
The central bank’s Monetary Policy Committee has been watching pay growth in the UK closely for signs that sky-high inflation may be becoming entrenched in the economy.
Economist Samuel Tombs, at Pantheon Macroeconomics, said: “Today’s labour market report strengthens the case for the Monetary Policy Committee to hold back from raising bank rate further next week, which already had been bolstered by the collapse of two U.S. banks over the weekend. Most importantly of all, wage growth has slowed substantially.”A man walks past a jobcentre. The total number of people inactive because of ill-health is up by more than 150, 000 in the past year. Photograph: Nathan Stirk/Getty Images
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Unwelcome though it is for a government facing strikes by doctors and nurses in the months ahead, the message from the latest labour market figures is clear: Britain is already the sick man of Europe.
More than 2.5 million people who are economically inactive cite long-term sickness as the reason why they are not looking for a job – and the number is rising sharply.
Data from the Office for National Statistics shows the total number of people inactive because of ill-health up by more than 150, 000 in the past year and by 89, 000 in the three months to February.
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Clearly this matters for the individuals affected and the upward trend appears to reflect the lingering impact of the Covid-19 pandemic. But it also matters for the economy at a time when – despite a fall in inactivity overall as a result of more young people working – there are still more than 1m job vacancies.
As Jane Gratton of the British Chambers of Commerce noted, the unfilled posts represent a drag on firms, preventing them from taking on new work and leading to upward pressure on pay. Annual private sector earnings growth is running at just under 7%.
Ideally, the prime minister, Rishi Sunak, and the chancellor, Jeremy Hunt, would like to have the NHS working at full speed to reduce the record numbers of people waiting for hospital treatment. In England alone, the figure is more than 7 million.
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In reality, the opposite is the case. Strikes over pay and conditions will lead to even longer waiting lists, making it harder to reduce the number of people inactive because of long-term sickness.
Ben Harrison, the director of the Work Foundation at Lancaster University thinktank, said: “The OECD recently found that the UK has suffered the biggest decline in workforce participation of any G7 economy since the pandemic.”
Tony Wilson, the director at the Institute for Employment Studies, said: “Figures for long-term ill-health are particularly worrying, rising again in the latest data to a new peak of over 2.5 million. This is being driven in particular by people staying out of work longer, rather than more people leaving work now.
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“So we need to focus in particular on how we help those who want to work to get back in – with specialist employment support, faster access to health services and more inclusive recruitment and workplace support.”
Reducing NHS waiting lists was one of the five policy pledges made by Sunak to voters at the start of the year, and a summer of strikes will make it harder to meet that promise. It will also make it harder to meet one of the prime minister’s other objectives: to return the economy to growth.
