The latest labour market stats continue the trend of low unemployment and high vacancies. Most figures run to November when the economy reached its pre-pandemic size. To meet demand firms were hiring. Despite this, regular pay, though growing at 3.8%, could not keep up with inflation in the year to November and fell 1% in real terms. However, some white-collar workers such as those working in Finance and Business Services got larger pay rises with a 6.1% rise in nominal pay.
Although vacancies reached record highs, the experimental single month vacancy data shows a decrease for the second month in a row, which chimes with other data suggesting vacancies may have peaked. However, they remain at very high levels.
Responding to today’s ONS figures, Jonathan Boys, labour market economist for the CIPD, the professional body for HR and people development comments:
"In the round these figures are encouraging. The labour market continues to recover and show furlough ending with a whimper, rather than a bang. However, the landscape of low unemployment and high vacancies poses challenges for employers’ recruitment and retention efforts. Unemployment decreased to 4.1% which, while not lower than pre-pandemic, is very low by historical standards. Competition for candidates therefore remains fierce as there are fewer people looking for each available job.
"Pay is struggling to keep up with inflation and this will become more acute as the year moves on, particularly when the energy price cap is raised in April.
"Although not all employers have the scope to raise pay, there are plenty of things they can do to attract and retain a wide talent pool such as a focus on job quality and flexibility. Employers will have to ensure that they are taking steps to widen their recruitment strategies and provide flexible jobs to ensure they can attract and retain older workers, people with caring responsibilities and those with long-term health conditions that are willing and able to work.
Boys continues: “Against this backdrop of a tightening labour market, we also need Government to act to make changes to skills policy, particularly reforming the Apprenticeship Levy into a more flexible training levy to help employers boost investment in training and meet skills gaps and shortages.”
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