Labour Market Update – April 2023

03/5/23

Labour Market Overview

It is the start of spring and new beginnings, but 2023 still feels like it will be a challenging year. We continue to see industrial action in the public sector which is impacting on the wider economy.

According to the ONS latest Business Insights and Impact on the UK Economy, nearly 3 in 20 businesses with more 10 or more employees reported a shortage of workers in late March 2023. The latest ONS Labour Market Overview reported:

3.8% or 1.29 million people were unemployed; 23% have been unemployed for more than 12 months and a 0.1% increase on previous quarter
Employment rate increased slightly to 75.8%
8.79 million people are economically inactive, 153,000 lower than the last quarter driven by 16 to 24 year olds
Economically inactive is still nearly half a million higher than pre-pandemic levels, of which 590,000 are classified as long term sick but want to have a job
Vacancies fell again to 1.10 million, the ninth consecutive quarterly fall. The number of unemployed people per vacancy was slightly up at 1.2 due to the decrease in vacancies
Record level of payrolled employees at 30 million, up 533,000 over the 12-month period
Growth in total pay was 5.9% and regular pay was 6.6% and they fell in real terms by 3% and 2.3% respectively. This is one of the largest falls since 2001
5.9 million people were claiming Universal Credit, of which 1.44 million were searching for work
Redundancies rose again to 3.2 per thousand employees and remains low

The Migration Observatory has published The Labour Market Effects of Immigration and identified these key points:

The number of jobs in the UK economy is not fixed. Migrants may compete with existing workers in the UK for jobs, but they also cause the number of jobs to increase.
Research shows that the impacts of migration on wages and employment prospects for UK-born workers is small.
Low-wage workers are more likely to lose out from immigration while medium and high-paid workers are more likely to gain, but the effects are small.
The wage effects of immigration are likely to be greatest for resident workers who are migrants themselves.

The latest REC Labour Market Tracker revealed that job adverts remain at high levels despite inflation concerns. There were 205,947 new job listings in the week 6-12 March 2023, this was 1.5% higher than the week before.

The CIPD has investigated How to boost the UK Labour Supply. In an economic environment where the UK workforce has shrunk by around 177,000 people since pre-covid peak, unemployment remains low with demand for labour still strong with high vacancy levels.

They have concluded that the following public policy changes are needed:

Help younger people into work
Support workers’ mental health
Improve job quality and availability of flexible working
Refine immigration policy
Boost adoption of technology

The Financial Times reported on businesses turning to TikTok to recruit workers due to the chronic labour shortages. Amazon, Maersk, ASDA and Tesco are among a handful of groups that have injected £30,000 each into a campaign using the video-hosting site to promote jobs in the logistics industry.

The KPMG and REC, UK Report on Jobs for the North East reported that job vacancies across the North of England continued to increase in March, in line with the trend seen for just over two years. Additionally, the North of England continued to record the fastest increase in job openings of the monitored English regions. It also reported that Temp candidate numbers had risen at fastest pace since January 2021. The seasonally adjusted Temporary Staff Availability Index rose above the neutral 50.0 mark in March, signalling a renewed increase in the supply of candidates for short-term roles across the North of England. The improvement in availability was strong overall and, as was the case with permanent staff supply, sharper than the other three monitored English regions.

References
https://www.ons.gov.uk/businessindustryandtrade/business/businessservices/bulletins/businessinsightsandimpactontheukeconomy/latest
https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment
https://migrationobservatory.ox.ac.uk/resources/briefings/the-labour-market-effects-of-immigration/#kp1
https://www.rec.uk.com/our-view/news/press-releases/labour-market-tracker-job-adverts-remain-high-levels-despite-inflation-concerns-rec
https://www.cipd.co.uk/knowledge/work/trends/uk-labour-supply
https://www.ft.com/content/6d00b985-0ab0-4352-9e95-a5d82497ddba
https://www.rec.uk.com/our-view/reports-jobs

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