Labour Market Update – March 2024
Labour Market Overview
The latest ONS Labour Market Overview sees the re-introduction of the Labour Force Survey data:
- UK unemployment rate increased slightly to 3.9%, 1.359 million people unemployed
- Unemployment amongst young people remains high, particularly the youngest age group (aged 16-17 = 25.2% / aged 18-24 = 10.3%)
- Employment rate was largely unchanged at 75.0%, 33.17 million people employed
- UK economic inactivity rate increased slightly on the last quarter to 21.8%, higher than 12 months ago due to an increase in 16 to 34 years olds, which was slightly offset by a decrease in those aged 35 to 64
- 25 million people are economically inactive, an increase of 100,000 on last year and 700,000 higher than pre-pandemic levels
- Vacancies fell again to 908,000, the 20th consecutive period fall, down 43,000 from a year ago, but higher than pre-covid levels
- Payrolled employees for February 2024 increased by 20,000 to around 30.4 million, 1.33 million higher than pre-pandemic levels
- Annual growth in regular pay without bonus increased by 6.1%, and with bonus by 5.6%. Adjusted for inflation, annual growth regular pay was 1.8% and total pay was 1.4%
- Redundancies increased to 4.6 per thousand employees, 1.4 higher than last year
The Chancellor delivered his Spring Budget Statement with a continued focus on rewarding work and supporting people into work:
- Further 2p cut in National Insurance Contributions (NIC) reducing tax for 29 million workers
- Expansion of the childcare support in England, providing 30 hours a week to eligible parents
- Introduce the High-Income Child Benefit Charge in April 2026, to end the unfairness for single earner families in the child benefit system and raise the threshold to £60,000
- Support for self-employed workers by cutting the main rate of Class 4 self-employed NIC to 6%
- Extending the duration of the Additional Jobcentre Support pilot for a further 12 months with new claimant commitments at 6, 13 and 26 weeks to agree to more work requirements or have their claim closed
Ian Beaumont, Newcastle Office Senior Partner for KPMG states in The KPMG and REC, UK Report on Jobs: North of England that “Candidate availability has risen again as businesses continue to delay hiring decisions. Candidates that are securing roles are seeing increased starting salaries due to tough competition and businesses trying to access the right skills. We’d expect to see wage increases continue to play out in April as businesses adapt to the increase in National Minimum Wage, but it may also prolong business hesitancy to hire as they face an increase in their cost base.”
The report also advises that after a month of decline, openings for permanent roles across the North of England increased in March. However, the increase in permanent job vacancies was only marginal. Of the four monitored English regions, only the Midlands posted a faster increase. Meanwhile, temporary vacancies in the North of England remained in contraction territory in March, thereby marking the second decline in successive months. The reduction picked up slightly from February but remained only modest. In regards to staff availability, the strongest rise in permanent staff supply since last August was reported. March saw the availability of permanent candidates rise across the North of England, which has been the trend since the start of the year. As well as being sharp, the rate of increase was the strongest in seven months. This largely reflected an increased number of redundancies, according to recruiters. The North of England registered the quickest rise in permanent staff supply of all monitored English regions for the second month running. This also pointed to a further uptick in temporary staff availability in March, thereby stretching the current trend of expansion to just over a year. The rate of increase was sharp and the strongest since last July. Where an increase was reported, this was linked to an excess of supply compared to demand for short-term staff. The increase in availability of temporary staff across the North of England was softer than that seen at the UK level.
The Office of Budgetary Responsibility (OBR) published its Economic and fiscal outlook March 2024 and is expecting a moderate rise in the unemployment rate, peaking at 4.5% in the last quarter of 2024, which represents around 1.6 million people looking for work and is marginally lower than their forecast in November 2023. The unemployment rate is then forecast to decline to around 4.1% in 2028.
The National Institute of Economic and Social Research (NIESR) has published its Economic Outlook for Winter 2024 and reports that:
- UK GDP growth will likely remain sluggish into medium term
- Inflation is set to fall below the Bank of England’s 2% target in April
- Bank of England expected to start cutting interest rates in May
- Average unemployment forecast for 2024 is 4.7% and rising to 5% by 2027
The Chartered Institute of Personnel and Development (CIPD) has collaborated with the 50Plus Choices Employer Taskforce to recommend ways in which the government can help employers reap the benefits of recruiting and retaining 50+ workers. 30% of the working population is now made up of people over 50. Flexible after Fifty found that amongst the over 50s:
- 72% already work flexibly or want to do so
- Part-time working is the most common type of flexibility
- 4% work from home
- 9% use flexible time
Bright Horizons’ Modern Families Index 2024 reveals a high risk of employees leaving their current roles. Key highlights:
- 42% of respondents are now likely to look for new employment in the next 12 months
- 78% would carefully consider childcare options before accepting promotion or a new job
- Employer support is not felt as strongly as last year
The government published a vision for workplace culture change to support autistic people to start and stay in work. Currently just 3 in 10 autistic people are in employment, despite most wanting to work.
The Buckland Review sets out 19 recommendations including signing up to the Austica Neurodiversity Employers Index; improving recruitment ensuring Jobcentre careers advisers can provide appropriate advice; and supporting autistic people in work by producing ‘autism design guides’ to create better suited workplaces.
The Joseph Rowntree Foundation’s latest briefing Importance of ill health to the UK’s labour market participation challenge states that increasing labour market participation is an important policy goal both for those locked out of paid work and for the broader economy. It provides the following insights:
- Policy should take a preventative approach – the trend towards rising ill-health is not inevitable
- Employers need support to redesign jobs
- Ensure timely access to health and social care services
- Establish a more active and supportive system of sickness management to increase job retention
- Address the way social security undermines the goal of labour market participation
- Shift the focus of employment support to prioritise and work better for those with long term conditions or disabilities
The March edition of HMRC’s Employer Bulletin is available and included in this edition are important updates on reporting expenses and benefits for the tax year ending 5 April 2024 and claiming tax relief on work related expenses.
Immigration Update
The Migration Advisory Committee (MAC) has published the Rapid review of the Immigration Salary List (ISL) and made the following recommendations:
- 21 occupations to be included in the ISL which represents 8% of job roles eligible for the skilled worker visa route
- From April 2024, the minimum salary for non-health and care worker occupations on the ISL will be £30,960 and for health and care workers it will be £23,200
- A wider review of the ISL will take place later this year.
The government has published the latest immigration system statistics for the year ending 31st December 2023:
- 40 million entry clearance visas granted in 2023, 20% higher than 2022 and 7% higher than before the pandemic
- 337,240 work visas granted, 26% higher than 2022
- Skilled worker visa remain consistent with 2022
- Skilled Health and Care visas doubled to 146,477
- 279,131 dependents were granted a work visa, 80% higher than 2022
- Grants of extensions for the main applicant increased by 48%, primarily in Health and Care, and Graduate visas
The latest EU Settlement Scheme statistics from 28th August 2018 to the end of December 2023 have been published:
- 7 million applications relating to 6.2 million people (some people have made multiple applications)
- 7 million people have obtained a grant of status (3.7 million settled status and 2 million pre-settled status)
- 14% had other outcomes including refusals (666,470) and invalid applications (198,750)
- Since 30 June 2021 there have an average of 55,700 applications per month
- Top nationalities are Romanian (1.7 million) and Polish (1.2 million)
- 89% of applications were received from applicants in England
The Migration Observatory has published a briefing: Migrant Settlement in the UK The briefing examines settlement or indefinite leave to remain (ILR). It looks at how many non-EU migrants settle in the UK and discusses post-Brexit EU Settlement Scheme:
- The majority of non-EU migrants who received an initial visa between 2004 and 2017 did not acquire ILR in the UK
- 25% of people granted settlement in 2022 were initially granted a family unification visa, reflecting the fact most people who migrate for family reasons stay in the UK long term
- 50% of people granted settlement in 2022 had been in the UK on a temporary visas for 5 to 7 years, and around one in eight took 10 years or more
- The cost of an application for ILR has increased several times over the 20 years reaching £2,885 in October 2023
- By September 2023, 1.8 million EU citizens held pre-settled status and therefore did not hold secure permanent residence status
References
https://www.gov.uk/government/publications/spring-budget-2024/spring-budget-2024-html#rewarding-work
https://obr.uk/docs/dlm_uploads/E03057758_OBR_EFO-March-2024_Web-AccessibleFinal.pdf
https://www.thephoenixgroup.com/media/ch0eta1h/flexible-after-fifty-report.pdf
https://migrationobservatory.ox.ac.uk/resources/briefings/migrant-settlement-in-the-uk/
https://www.gov.uk/government/publications/employer-bulletin-march-2024