Labour Market Update – May 2024
Employment Trends
The latest ONS Labour Market Overview show that:
- UK unemployment rate increased again to 4.3%, 1.486 million people unemployed
- Unemployment amongst young people remains high, particularly the youngest age group (aged 16-17 = 26.3% / aged 18-24 = 11.2%)
- Employment rate was largely unchanged at 74.5%, 32.97 million people employed
- UK economic inactivity rate was slightly up on the last quarter at 22.1% and higher than 12 months ago. The quarterly increase was largely due to those aged 16 to 34 and 50 to 64 and the annual increase was mainly due to 16 to 34 year olds.
- 9.38 million people are economically inactive, an increase of 302,000 on last year and 832,000 higher than pre-pandemic levels.
- Vacancies fell again to 898,000, the 22nd consecutive 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 January 2024 to March 2024, an increase from the previous quarter due to rising unemployment.
- Payrolled employees for April 2024 were 30.2 million, a rise of 0.4% compared to last year. This is a rise of 129,000 over the last 12 months. 1.23 million higher than pre-pandemic levels.
- Annual growth in regular pay without bonus increased by 6.0%, and with bonus by 5.7%. Adjusted for inflation, annual growth regular pay was 2% and total pay was 1.7%.
- Claimant count increased by 8,900 on the month and 29,000 on the year to 1.579 million. This is the measure of those receiving benefit principally due to being unemployed.
- Redundancies decreased to 3.1 per thousand employees, 0.2 higher than last year.
KPMG and REC, UK Report on Jobs: North of England reported that recruiters across the North of England signalled a further reduction in the number of staff placed into permanent roles, this extends the current sequence of contraction to just short of a year. The rate of decline was solid and largely consistent with April. However the demand for temporary staff increased for the first time in 3 months, which is thought to be due to new contract wins and the start of new projects. Recruiters across the North of England advised of a rise in the number of vacancies available for permanent roles for the third month running in May, and for a second successive month the North of England recorded a rise in the number of temp vacancies. The KMPG’s May survey data showed a fifth consecutive monthly increase in the availability of permanent staff, thought to be due to increased candidate confidence. Also there was increased willingness among candidates to accept temp roles due to redundancies and the current economic climate.
The CIPD has published its Spring 2024 Labour Market Outlook Report which shows that despite the labour market reverting to somewhat of a post-Covid normality, there continues to be a high level of vacancies by historic standards. Additionally, the post-pandemic frenzy of job changes appears to be over with more employees looking to stay put. Key points: Net employment balance edges down to pre-pandemic levels.
- More employers keeping staffing levels steady
- Public sector twice as likely to reduce staffing levels
- Hard to fill vacancies remain prevalent
- Expected pay awards higher in private sector
The British Chamber of Commerce Quarterly Recruitment Outlook surveyed more than 4,600 UK firms and found:
- Recruitment conditions have eased with fewer firms facing difficulties in hiring
- 66% said they faced challenges finding staff, the lowest percentage in three years
- 70% of production and manufacturing companies reported challenges hiring staff
- 62% had attempted to recruit in the last quarter
The Resolution Foundation has published its latest briefing: Firm Foundations – Understanding why employers use flexible contracts. Key findings from employers:
- 75% used some form of flexible contract last year
- 53% said at least a quarter of their workforce were on some form of flexible contract
- 32% who use flexible contracts said staff preferred them
- Main factor driving the use of these contracts is demand variability
- 25% said it helped them to reduce their wage bill
- 48% said they planned to increase the share of their workforce on variable hours contracts
The House of Commons Library published its latest research briefing on UK Business Statistics. It found that there are 5.6 million private sector businesses in the UK, this is increasing but still lower than pre-Covid levels. The recent growth has been driven by small business with no employees. There are 8,000 large businesses which represent 0.1% of the business population but they support 39% of the jobs.
Action Fraud have reported an increase in the numbers of recruitment scams. Employment fraud happens when a fraudster claims to be a recruitment agent, hiring a person for a job – which can be in a foreign country – that doesn’t exist. They contact the person and ask them to complete a questionnaire and maybe have a phone interview. Once the person has a job offer, the fraudsters contact them and charge fees for services that the person doesn’t need and if they obtain bank account details, they will steal money from their account.
Welfare
The Prime Minister has outlined a package of sweeping reforms to put work at the heart of welfare and deliver on his “moral mission” to give everyone who is able to work, the best possible chance of staying in, or returning to work. This includes:
- Consultation on the Personal Independence Payment (PIP)
- Review of the disability benefits system to target benefits to those that need them most
- Tightening and eventual removal of the workplace capability assessment
The government’s green paper Modernising support for Independent Living: the health and disability green paper was published on 29th April 2024.
People Management reports on a new poll by MetLife UK (MetLife UK is a provider of employee protection insurances) which explored respondents feelings around calling in sick to work, as well as their response for not doing so. Key findings were:
- 26% felt or would be guilty that work colleagues will pick up extra work if they call in sick
- 59% said they had not taken off time for ill health despite the fact they needed to
- When asked why, 36% said they thought no one would be able to cover them, and 27% said their colleagues needed them
The Telegraph reports on new analysis by the Trades Union Congress (TUC) which found that more than 1.5 million women have dropped out of the workforce because of long-term sickness, and they have blamed the rising NHS waiting lists for the crisis. Women are driving record worklessness because of ill health as a growing number drop out of the jobs market because of neck and back pain.
Immigration Policy
Changes to EUSS announced – The Home Office will change the duration of pre-settled status extensions from 2 to 5 years and remove the pre-settled status expiry date from the digital profiles in the online checking services for Right to Work.
The Government has announced new measures to tackle abuse of the student visa route, including tougher compliance standards, raised financial maintenance requirements and restrictions on remote course delivery. The reforms form part of the government’s overall plan to cut legal migration, which would mean 300,000 who arrived last year would be unable to do so under the new rules. Read more here …
The Home Secretary, James Cleverly, reports that the strong action to tackle both legal and illegal migration is working. New monthly visa statistics revealed that visa application across key routes affected by the changes fell by 24% in the first months of 2024, compared to the same period last year. The statistics showed falling numbers across the Skilled Worker, Health and Care sectors.
A new report Taking Back Control from the Centre for Policy Studies written in conjunction with former Immigration Minister Robert Jendrick and former MP Neil O’Brien argues that the scale and composition of recent migration have failed to deliver the significant economic and fiscal benefits that Brexit promised, whilst putting enormous pressure on housing, public services and infrastructure.
The long awaited Independent Review into labour shortages in the food supply chain: government response has been published. The food supply chain contributes £128 billion to the UK economy each year and employs over 4 million people. There are 19 government commitments including:
- Extension of the Seasonal Worker visa route to 2029 but reducing the number of visas over time. In 2025, there will be 43,000 visas in horticulture (2,000 less than 2024 and extra 10,000 has been removed) and 2,000 in poultry
- Dedicated FDSC Sector attractiveness project to attract more people to work in the sector
- Continuation of work on the Employer Pays Principle proposal for the Seasonal Worker visa route with the Seasonal Worker Taskforce
- No changes to the apprenticeship levy
- Provision of a workforce data product for the food supply chain to improve labour market and skills information.
- Up to £50 million additional support for packhouse automation from 2024 to 2026
References
https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment
https://www.cipd.org/uk/knowledge/reports/labour-market-outlook/
https://www.telegraph.co.uk/business/2024/05/13/long-term-sickness-driving-worklessness-among-women/
https://www.actionfraud.police.uk/a-z-of-fraud/recruitment-scams
https://www.gov.uk/government/news/home-secretary-delivering-on-promises-to-tackle-immigration
https://cps.org.uk/research/taking-back-control/
https://kpmg.com/uk/en/home/media/press-releases/2023/10/latest-press-releases.html