Official figures show that job vacancies in the UK have dropped for the eighth month in a row, indicating economic pressure on firms and uncertainty across industries. The Office for National Statistics (ONS) has revealed a drop of 51,000 job vacancies to 1.12 million in the three months to February. This follows closely on the heels of the recent news that Britain’s unemployment rate remained unchanged at 3.7% in the same period. However, there were 65,000 more people employed than in the previous quarter, bringing the total number to 32.8 million, while the number of unemployed people rose by 5,000 to 1.3 million, according to the ONS. The reduction in vacancies is leading to fears of further cracks in the jobs market, as economic uncertainty weighs on companies. Additionally, the data shows that there were 220,000 days lost to strike action in January, down from 822,000 in December, with schools most affected.
The drop in vacancies indicates cracks in the jobs market, despite the fact that Britain’s unemployment rate remained unchanged at 3.7% in the three months to January, indicating that there are still more jobs available than job seekers. However, the reduction in vacancies suggests that the economy is slowing, leading companies to hold back on hiring. The ONS has reported that this slowdown has taken the pressure off the Bank of England to raise interest rates, especially as there was recent turmoil sparked by the collapse of Silicon Valley Bank and another US lender. Inflation still remains too high, but the drop in wage growth means that the Bank is less likely to raise interest rates next week.
Although permanent salaries are growing, the latest figures show that both total and regular pay have fallen in real terms, highlighting the financial pressures that the UK population is facing. Samantha Hurley, Operations Director at the Association of Professional Staffing Companies (APSCo) commented that the labour market is still tough, especially in historically skills short fields, such as Science, Technology, Engineering and Maths. The number of people who are unemployed per vacancy has slightly increased, but with over a million vacancies still being reported, the recruitment struggles in these fields are not going to dissipate any time soon.
The ONS data revealed that pay remained under pressure despite declining inflation, while the data showed that wage growth has eased back sharply. Total wages including bonuses lifted by 5.7% in the three months to January, with regular wages, excluding bonuses, increasing by 6.5%, but this was lower than the 6% growth for total pay and 6.7% for regular pay seen in the previous quarter. With Consumer Prices Index (CPI) inflation taken into account, real regular pay fell by 3.5% and total pay including bonuses was 4.4% lower. The ONS said average regular pay growth for the private sector was 7% in the latest figures, while it stood at 4.8% for the public sector.
The government is attempting to address the shrinking workforce in the UK by announcing proposals in the Spring Budget to encourage older workers back into the job market. Chancellor Jeremy Hunt wants to help people’s wages go further by sticking to the plan to halve inflation this year. He will set out how the government will go further to bear down on inflation, reduce debt and grow the economy, including by helping more people back into work.
Darren Morgan, director of economic statistics at the ONS, reported that the rate of inactivity eased back to 21.3% in the quarter to January from 21.5% as more young people returned to work amid the cost-of-living crisis. However, a record number of people were completely outside the labour market due to long-term effects of Britain’s exit from the European Union. The government has not yet clarified the situation for non-UK nationals after Brexit. The lack of clarity has caused anxiety among non-UK workers and created uncertainty in the job market.
Overall, the latest labor market data from the ONS suggests that the UK’s job market is still facing significant challenges. While the unemployment rate remains stable, the drop in job vacancies for the eighth month in a row indicates that companies are holding back on hiring due to wider economic pressures.
Moreover, the slowing wage growth is putting a financial strain on households, despite declining inflation. The government’s efforts to encourage older workers back into the workforce and improve skills development are promising, but they cannot be expected to yield immediate results.
In the meantime, employers are facing a tight labor market, particularly in fields requiring STEM skills, and need easier access to highly skilled and flexible workers both domestically and internationally. The government’s unclear stance on the status of non-UK workers after Brexit is only adding to the uncertainty.
Overall, it remains to be seen how the UK’s job market will fare in the coming months, but it is clear that significant challenges remain.