Labour Market Report – December 2024
Labour Market Overview
The latest ONS Labour Market Overview shows that:
The Resolution Foundation reports that official labour market data has ‘lost’ almost a million workers, and is over stating the scale of Britain’s economic inactivity. The Foundation’s analysis suggests that there could be 930,000 more people in employment than the latest official figures suggest, and that the current 16-64 employment rate could be around 76 per cent (as it was pre-pandemic), rather than its official rate of around 75 per cent.
The CIPD’s Autumn 2024 Labour Market Outlook provides some optimism, showing a net employment balance with more businesses hiring than reducing staff. Public sector employment confidence has returned to positive territory, although hard-to-fill vacancies remain a significant issue. Median basic pay increases remain at 3%, with the public sector expected to see rises of 4%.
Flexible working emerges as a critical solution, with inflexible workers four times more likely to exit the workforce after health challenges.
The Working Families Benchmark 2024 underscores the growing importance of flexible working, family-friendly cultures, gender equality, and wellbeing practices among leading employers.
- 62% of top employers report that over three-quarters of their staff now work flexibly, with smaller organisations leading the way, as 100% of their employees work flexibly compared to 59% in larger organisations.
Flexible working is proving advantageous for employers too, with 54% reporting reduced business travel costs, 51% saving on building expenses, 42% experiencing increased productivity, and 36% seeing lower staff turnover.
The government has published the Get Britain Working White Paper detailing its proposals to reform employment, health and skills support to tackle economic inactivity and support people into good work. The £240m initiative includes plans to reform the job centres, widen access to work and learning opportunities for young people and review the role of employers in making work more accessible for people with disabilities and health conditions
The Department for Education provides support to businesses as part of the Skills for Life initiative to help with staff recruitment and skills development. There are 10 training and employment schemes available including apprenticeships, Multiply (free maths course for over 19s), Sector Based Work Academy Programmes and Employing Prisoners.
Employment Trends
The KPMG and REC, UK Report on Jobs: North of England has reported that the decline in permanent placements fell further as the seasonally adjusted Permanent Placement Index fell further in December. There was also a drop in temp billings, as December data pointed to a second successive monthly decrease across the North of England. A drop in demand for short-term staff and the non-renewal of contracts drove the latest downturn, according to respondents of the KMPG’s survey. Although historically this is a usual trend at this time of year.
There was a substantial boost to permanent staff availability in the North of England in December, thereby stretching the current run of uplifts to exactly a year. The latest increase was linked by recruiters to a rise in redundancies and skills mismatches. Recruiters based in the North of England signalled a further robust rise in temporary staff supply during December, thereby extending the current trend of growth to 22 months. Panel members often linked the improvement in the availability of short-term staff to the ongoing market downturn.
Recruitment consultancies in the North of England pointed to another monthly increase in permanent starting salaries in December, thereby extending the current sequence of growth to nearly four years. The respective seasonally adjusted index rose in each month of the final quarter, placing the rate of inflation at a four-month high that was strong overall. The rise is believed to be linked to increased competition for skilled staff. December survey data signalled a thirteenth consecutive monthly rise in short-term wages across the North of England. Amid another marked increase in the availability of temporary staff, the rate of inflation was only marginal and subdued by historical standards. The rate of temporary pay growth across the North of England was largely in line with the UK trend in December.
Immigration Policy
The Home Office’s latest immigration statistics for the year ending September 2024 which was published on 28th November revealed that 241,719 work-related visas were granted to main applicants, a 28% decrease from the previous year but still 76% higher than in 2019. Notably, ‘Temporary Worker’ visas reached 77,719, marking a 7% year-on-year increase and an 89% rise compared to 2019, driven largely by growth in the ‘Seasonal Worker’ visa route.
The Migration Observatory highlights broad trends in its briefing on net migration to the UK. Net migration reached an unusually high 728,000 in the year ending June 2024, driven by an increase in non-EU arrivals. However, net migration is projected to decline from 2025 onwards, although the outlook remains uncertain. The report also notes a shift in migration patterns post-Brexit: while EU citizens previously accounted for the majority of net migration, EU net migration is now negative.
The UK government provided an update on the transition to eVisas, highlighting progress made and upcoming changes. Migration and Citizenship Minister Seema Malhotra MP issued a Written Ministerial Statement (WMS) in Parliament, reporting that:
- Over 3.1 million individuals successfully transitioned to eVisas between March and November 2024.
- More than 6 million people have been using eVisas for years, enabling streamlined digital access to immigration records.
- Production of biometric residence permits (BRPs) and biometric residence cards (BRCs) ceased as of 1 November, with all new immigration decisions now issuing eVisas.
BRPs expired on 31 December 2024, the government urges those who have not yet transitioned to an eVisa to do so promptly via gov.uk/eVisa. Right to Work and Right to Rent services, which allow verification of immigration status can be used even with expired BRPs, provided the individual has valid status. This does not mean that labour providers and employers can accept an expired BRP as evidence of right to work, but that the worker will be able to use the BRP to generate a share code, which can then be checked through the online service.
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.cipd.org/globalassets/media/knowledge/knowledge-hub/reports/2024-pdfs/8718-lmo-autumn-report-2024-web.pdf
https://www.bankofengland.co.uk/monetary-policy-report/2024/november-2024
https://workingfamilies.org.uk/wp-content/uploads/2024/11/20241113-WF-Benchmark-Report-2024_FINAL.pdf
https://assets.publishing.service.gov.uk/media/67448dd1ece939d55ce92fee/get-britain-working-white-paper.pdf
https://find-employer-schemes.education.gov.uk/schemes/
https://www.gov.uk/government/statistics/immigration-system-statistics-year-ending-september-2024
https://migrationobservatory.ox.ac.uk/resources/briefings/long-term-international-migration-flows-to-and-from-the-uk/
https://www.gov.uk/guidance/online-immigration-status-evisa