A slowly cooling labour market gives employers and policymakers time to react

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 increased volatility in the estimates, it’s brave to draw out strong conclusions from small quarterly changes in the data. The big picture though, remains the same. Inactivity continues to rise which will worry policymakers and businesses struggling with unfilled vacancies. Unemployment held steady and remains at historically low levels. This means there are few people looking for and available to work.

“There are signs that the labour market continues to cool but only slowly. Vacancies – a measure of employer demand for staff - for example, continue their descent but remain above pre-pandemic levels. There has also been a sizable increase in the number of people reporting redundancy. Pay is also growing at a slower rate, but with falling inflation this does mean that in real terms, pay packets continue to grow.

“Financial crashes and pandemics yank the carpet from underneath employers and require a swift response, but it’s more usual to encounter a slowly unfurling trend, in this case a cooling labour market. Employers need to conduct proper workforce planning so that they have the long-term capacity to meet demand. They mustn’t take their eye off the ball with regards to training and development, investment in which has fallen away in recent years.”