Published byCIPD

Positive real wage growth gives workers a chance to claw back some of the purchasing power lost during high inflation

A cooler labour market may lessen the focus on inactivity and ill-health, but policymakers and employers must continue to help people get into and stay in work

Responding to today’s ONS labour market figures, Jon Boys, senior labour market economist for the CIPD, the professional body for HR and people development, comments: 

With unemployment up and employment down, today’s statistics show a cooling labour market. Other evidence of cooling includes the continued fall in vacancies, and an uptick in the redundancy rate. Taken together, this will ease pressure on recruitment and retention. It may also lead to the Bank of England cutting the base rate sooner. 

Falling inflation means robust real regular pay growth of 1.9%, unseen since the post pandemic bounce back two and half years ago. If real wage growth can remain positive, workers could start to claw back some of the purchasing power lost in recent times.

Inactivity rose this quarter. Since the pandemic the long-term sick have become an increasingly large component of the total inactive. A tight labour market has kept a focus on inactivity as government and business sought to boost labour supply amidst skills shortages. As the labour market cools this focus might lessen, but it mustn’t. Employers can make reasonable adjustments and invest in occupational health. Not only to facilitate people who are inactive back into work, but to future-proof their workforces by helping people to stay in work. Approximately half of people of working age with a long-term health condition are still in work, showing that appropriate measures can help both individuals and organisations be resilient.