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Workers in the North East are big winners of the National Living Wage – but jobseekers across the UK are counting the cost

Pay rises given to the UK’s lowest paid workers in April appear to have prompted thousands of companies to hold back on recruitment, according to new research by the world's biggest jobs site, Indeed.

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Indeed

  • Workers in North East England are three times as likely as Londoners to have received a pay rise from the introduction in April of the National Living Wage
  • Yet job vacancies across the UK have since slumped by 9%, according to data from the world’s biggest job site Indeed
  • Analysis shows fewer jobs are being advertised in 12 out of 13 sectors as higher wages and Brexit uncertainty weigh on employer confidence

Pay rises given to the UK’s lowest paid workers in April appear to have prompted thousands of companies to hold back on recruitment, according to new research by the world's biggest jobs site, Indeed.

Its latest UK Industry Employment Trends report reveals a 9% drop in vacancies in April alone, representing a 12% fall on the number of openings available at the start of 2016.

The monthly report, which tracks levels of recruitment in 13 sectors, found that only one – hospitality – saw an increase in job listings in April, likely to be the result of seasonal factors. Vacancies reduced in all other sectors, with the number of openings for HR professionals slumping by 18%, and even financial services companies reducing recruitment by 15%.

The slump in recruitment began in March and accelerated in April, leading the report’s authors to conclude that employers’ reluctance to hire is being driven by a combination of uncertainty over the outcome of the Brexit referendum (announced in late February) and the introduction of the National Living Wage on 1st April.

Meanwhile the pay rises provided by the National Living Wage have been spread unevenly across the country, with workers in North East England enjoying the greatest benefit.

6% of jobs advertised in the North East during the first quarter of 2016 paid less than the £7.20 per hour that is now the legal minimum for workers aged 25 and over.

This compares with just 2.2% of jobs listed in South East England and London during the same period, suggesting that nearly three times as many workers in the North East, as a share of the regional workforce, will have received a payrise in April. Other areas with high numbers of jobs paying less than the National Living Wage included Northern Ireland (5.9%), Wales (5.3%) and Scotland (4.8%).

Table 1: UK Industry Employment Trends, April 2016 (job vacancies by sector)

Industry

Monthly change

Quarterly change

Accounting

-16%

-19%

Construction

-8%

-10%

Education

-9%

-24%

Financial Services and Banking

-15%

-19%

Healthcare

-8%

-13%

Hospitality

+4%

+9%

Human Resources

-18%

-20%

Information Technology

-12%

-18%

Manufacturing

-7%

-9%

Media

-1%

-1%

Real Estate

-13%

-15%

Retail

-9%

-12%

Transportation

-4%

-5%

Table 2: % of workers benefiting from introduction of National Living Wage

Region

Proportion of jobs paying below NLW in Q1, 2016

North East

6.0%

Northern Ireland

5.9%

Wales

5.3%

Scotland

4.8%

North West

4.7%

East Midlands

4.5%

Yorkshire and Humber

4.0%

East Anglia

3.9%

South West

3.7%

West Midlands

3.5%

South East (including London)

2.2%

UK weighted average

3.2%

Mariano Mamertino, economist at the global job site, Indeed, comments: “The introduction of the National Living Wage has already proved divisive, and our findings will fire the debate further. While thousands of the UK’s lowest paid workers received a welcome boost to their April pay packet, the benefits have inevitably been concentrated in regions with higher numbers of poorly paid jobs – like North East England, Northern Ireland and Wales.

“Yet even by marginally eroding employers’ appetite to hire more staff, the policy may have unwittingly made life somewhat harder for some jobseekers. Job vacancies in 12 of the 13 sectors tracked by Indeed fell in April, accelerating a trend that began in March following the announcement of the EU referendum.

“The combination of business uncertainty about the potential impact of a Brexit, the slowdown of the economy amid global economic headwinds and a sudden increase in the wage bill for many firms has triggered a sharp cooling in the jobs market.”

www.indeed.com