“Several entrenched and complex issues are characterising the state of the UK’s labour market right now. Unemployment and economic inactivity each present growing cause for concern, with unemployment at 4.3% and the economic inactivity rate for those of working age remaining at an elevated 22.1%. These are the headline reasons for our likening of today’s market to an iceberg, with what is happening at a deeper level requiring urgent attention. As we get closer to the iceberg, increased unemployment, skill shortages, wage pressure and heightened levels of inactivity are becoming increasingly apparent. Even with last week’s GDP numbers indicating the economy is slowly recovering, redundancies abound, job vacancies and applicant rates both remain high, and employers are still encountering chronic skills shortages and talent mismatches.
“In the battle for talent, wage rises are stubbornly high and worrisome given the current lower levels of inflation and productivity levels, with wages in some cases being further inflated for certain roles and sectors because of competitive skills requirements. While productivity levels across the UK remain low, even with inflation coming down and a much-anticipated interest rate cut expected later this year, the road to further economic growth and competitiveness remains a rocky one.
Will unemployment and economic inactivity levels come down? Yes – but only if there’s a concerted effort to accelerate the UK economy by increasing collaboration between Government and business to make the right decisions; and being prepared to take risks by further investing for the future growth we’re aspiring towards. We also need to look beyond the numbers and evolve the financial cushions and pathways needed to get people into work, as well as reskilling and upskilling programmes to move more workers into specialised roles, for which there continues to be high demand.”