Responding to today’s ONS labour market figures, Jonathan Boys, labour market economist for the CIPD, the professional body for HR and people development, comments:
“With vacancies falling for the fourth consecutive quarter, the data suggests a softening in demand for labour. However, vacancies still remain near record high levels. There is also an increase in the unemployment rate in the year to September, but it remains near record lows. Recruitment and retention remain challenging for businesses as demand for candidates outstrips available supply. Although a recession may already be here, the labour market is often a lagging indicator, and it will be some time before we can see the downturn in official statistics.
“This mismatch between labour supply and demand is driving high nominal earnings growth, with regular pay (which excludes bonuses) growing 5.7% in the year to July-September 2022. However, prices are growing at a faster rate meaning that regular pay actually fell by 2.7% over the same period. The cost-of-living crisis is not affecting all workers equally. Private sector regular pay grew by 6.6% compared to 2.2% for the public sector. The growing wedge between the two will make recruitment and retention in the public sector increasingly difficult. Another concern is the falling value of pay packets despite large nominal pay rises. It is perhaps unsurprising then that in August there were 356,000 working days lost to labour disputes with a further 205,000 in September.
“This month's statistics highlight some pressing concerns for the UK. The inactivity rate continues to increase, being driven by long-term sickness. In addition to the human cost of ill health, there are consequences for labour supply.
“The cost-of-living crisis is also key concern for individuals, businesses, and policymakers. The CIPD’s own Labour Market Outlook, out this week, asked employers what they have done in response: 36% percent have increased wages and 29% have introduced more flexible working. 23% have highlighted sources of impartial financial information and guidance.”