Labour Market Update – August 2024

20/9/24

Labour Market Overview

The latest ONS Labour Market Overview shows that:

UK unemployment rate decreased to 4.2%, 1.435 million people unemployed.
Unemployment amongst young people decreased but remains high, particularly the youngest age group (aged 16-17 = 24.5% / aged 18-24 = 12%)
Employment rate increased slightly to 74.5%, 33.09 million people employed.
UK economic inactivity rate was largely unchanged on the last quarter at 22.2% and higher than 12 months ago.
9.410 million people are economically inactive, an increase of 350,000 on last year and 859,000 higher than pre-pandemic levels.
Vacancies fell again to 884,000, the 25th period fall, down 26,000 from previous quarter, but higher than pre-Covid levels. This means there were 1.6 unemployed people per vacancy in April to June 2024, similar to the previous quarter.
Payrolled employees for July 2024 were 30.4 million, a rise of 0.8% compared to last year. This is a rise of 252,000 over the last 12 months. 1.5 million higher than pre-pandemic levels.
Annual growth in regular pay without bonus increased by 5.4%, and with bonus by 4.5%, this was the lowest growth since 2022. Adjusted for inflation, annual growth regular pay was 2.4% and total pay was 1.6%.
Claimant count increased by 162,255 on the month and 256,680 on the year to 1.801 million. This is the measure of those receiving benefit principally due to being unemployed.
Redundancies increased to 3.8 per thousand employees, still slightly lower than last year.
100,000 working days were lost because of labour disputes in June, up from 51,000 in the previous month.

The CIPD published its latest Labour Market Outlook Summer 2024. Key findings:

Net employment balance falls slightly (the difference between employers expecting to increase staff levels in the next three months and those expecting to decrease)
Public sector employment confidence below zero
Over one fifth of the public sector plan to shrink staff
Hard to fill vacancies remain prevalent
Median expected pay drops to 3%

The Institute for Public Policy Research latest report found that the hidden cost of sickness absence increased to £103bn in 2023, an increase of £30bn since 2018. Most of this increase is due to lower productivity with only £5bn due to a rise in sick days. Employees now lose the equivalent of 44 days productivity on average due to working through sickness, up from 35 days in 2018, and lose a further 6.7 days taking sick leave, up from 3.7 days in 2018.

The Resolution Foundation published The Economy 2030 – The Final report and found that “the UK has great strengths, but is a decade and a half into a period of stagnation. The toxic combination of slow growth and high inequality was straining the living standards of low- and middle-income Britain well before the cost-of-living crisis struck. It is time to embark on a new path”. They identified 10 key facts including ‘Bad Work’ – half of shift workers in Britain receive less than a week’s notice of their working hours or schedules.

LCP, a financial and investment consultancy, have published a survey which reveals that 1 in 4 Brits are thinking about taking a second job as financial pressure continue to bite. Key findings:

56% of employees have experienced financial difficulty
43% said they spent part of their working day addressing personal issues
37% said they took time off for personal reasons
48% considering change their job to earn more money

Employment Trends

The KPMG and REC, UK Report on Jobs: North of England reported that the number of staff placed into permanent roles in the North of England decreased again in August. Although only marginal, recruitment agencies in the North of England posted a fourth straight month-on- month increase in temp billings.

For both permanent and temporary roles, the North of England continued to register the fastest vacancy growth of the four monitored regions. August data highlighted a sixth successive monthly rise in the number of permanent job openings, and vacancies for temporary roles increased for a fifth month running.

There was another marked rise to permanent staff availability across the North of England in August. Recruiters blamed the rise on challenging labour market conditions, with some noting a pickup in redundancies. The August survey data pointed to a further improvement in temporary staff supply, thereby extending the current run of growth to exactly a year-and-a-half. Recruiters linked the latest increase to greater demand for temporary roles.

The seasonally adjusted Permanent Salaries Index posted above the 50.0 no-change mark again in August, to signal three-and-a-half years of starting pay growth in the North of England. Some recruiters linked the rise in permanent starting salaries to an increase in senior roles. The rate of inflation was strong, but the softest seen since March and below its historical average. Recruiters in the North of England recorded sustained growth in pay for temporary workers in August. The increase marked the ninth increase in hourly wages in as many months. Total employee earnings (including bonuses) rose by 4.5% compared to a year ago in June, the lowest annual increase recorded since November 2021.

Updates on Legislation and Policy

The government has announced that they are changing the way that the National Minimum Wage is set. For the first time, the Low Pay Commission (LPC) will factor in the cost of living when deciding the rate of the Minimum Wage and Living Wage.

They are also taking the first steps towards making rates the same for all adults by narrowing the gap between the National Minimum Wage, for 18–20-year-olds, and the National Living Wage. In addition to the cost of living, the remit of the LPC will continue to consider the impact on business, competitiveness, the labour market and the wider economy.

Immigration Policy

The Home Office has announced that from 6th August 2024, any person with a biometric residence permit (BRP) expiring on 31 December 2024 can now create a UKVI account and access their eVisa, without needing an invitation from UK Visas and Immigration (UKVI). UKVI is transitioning to a fully digital immigration system. This shift means that physical documents, such as passport visa stamps, are being replaced by an online record of immigration status, known as an eVisa.

Biometric Residence Permits will be withdrawn at the end of December this year, and it is intended that nearly all visa holders living in the UK will have access to an eVisa by 2025. Workers with existing Biometric Residence Permits should continue to use them until they expire, but they should also create a UKVI account before the expiration date to transition to an eVisa.

Workers will no longer carry physical documents like visa vignettes. Instead, their immigration status is stored electronically, and they will access it through a UKVI account. Employers will need to verify the immigration status of workers using the online “View and Prove” service, which involves the worker providing a share code to confirm their right to work in the UK.

Workers will need to create a UKVI account to access their eVisa and share information about their immigration status – there is no cost associated with creating this account. Through their UKVI account, workers can update personal details and ensure their immigration status is correctly linked to their current passport.

For those with other physical documents, such as indefinite leave stamps or vignette stickers, there may be a need to apply for a biometric residence permit first, which can then be transitioned to an eVisa.
The UKVI has provided assets and video, to explain the changes and timescales involved. Members may wish to share these with workers who may be impacted.

The Home Secretary addressed Parliament setting out a different approach to migration – “one that links migration policy and visa controls to skills and labour market policies – so immigration is not used as an alternative to training or tackling workforce problems here at home.” Key points included:

Migration Advisory Committee (MAC) commissioned to review the reliance of key sectors on international recruitment
MAC to be strengthened including deploying additional Home Office staff to support their work
No changes to the minimum income required until the MAC has completed its review

Commentary

Maria Miller – Operations Director (Maria.Miller@gempartnership.com)

GEM are looking forward to working with our clients advising on all forthcoming changes initiated from the Employment Rights Bill and associated policy changes, impacting our industry sector. As a training provider we are also working with all relevant governing bodies to stay at the forefront of changes by Skills England. GEM hold direct funding and are able to support with a range of upskilling and staff development programmes to aid your workforce development.

I would welcome the opportunity to discuss the changing landscape with you and outline the support and programmes we offer that can enhance your People plans.

References

https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment

https://www.gov.uk/government/news/what-changes-are-we-making-to-the-minimum-wage

https://www.cipd.org/globalassets/media/knowledge/knowledge-hub/reports/2024-pdfs/8658-lmo-summer-report-2024-web.pdf

https://www.ippr.org/media-office/revealed-hidden-annual-cost-of-employee-sickness-is-up-30-billion-since-2018

https://economy2030.resolutionfoundation.org/wp-content/uploads/2023/12/Ending-stagnation-final-report.pdf

https://lcpuk.foleon.com/employee-wellbeing-survey/e-book-2024/

https://www.gov.uk/guidance/online-immigration-status-evisa

https://questions-statements.parliament.uk/written-statements/detail/2024-07-30/hcws51

https://kpmg.com/uk/en/home/media/press-releases.html

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