Labour Market Update – April 2024
Labour Market Overview
The latest ONS Labour Market Overview sees the re-introduction of the Labour Force Survey data:
- UK unemployment rate increased again to 4.2%, 1.440 million people unemployed
- Unemployment amongst young people remains high, particularly the youngest age group (aged 16-17 = 26.2% / aged 18-24 = 11%)
- Employment rate was largely unchanged at 74.5%, 32.98 million people employed
- UK economic inactivity rate was slightly up on the last quarter at 22.2%, 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 49
- 40 million people are economically inactive, an increase of 275,000 on last year and 853,000 higher than pre-pandemic levels
- Vacancies fell again to 916,000, the 21st consecutive period fall, down 13,000 from previous quarter, but higher than pre-covid levels
- There were 1.6 unemployed people per vacancy in December 2023 to February 2024, up from 1.4 as a result of vacancies falling and unemployment increasing
- Payrolled employees for March 2024 was 30.3 million, a rise of 0.7% compared to last year. This is a rise of 204,000 over the last 12 months. 1.27 million higher than pre-pandemic levels
- Annual growth in regular pay without bonus increased by 6.0%, and with bonus by 5.6%. Adjusted for inflation, annual growth regular pay was 1.9% and total pay was 1.6%
- Redundancies decreased 9.3 per thousand employees, 0.8 higher than last year
KPMG and REC, UK Report on Jobs: North of England, reported in their April survey data that there was a solid fall in the number of placements of permanent staff made across the North of England. The latest drop marked the tenth successive monthly decline, though the rate slowed to the softest for five months. The North of England reported a drop in the number of temporary billings for the third month running in April. The majority of recruiters in the region blamed the decline on firms’ budgetary restrictions. However, permanent job vacancies rose for the second month across the North of England in April. The rate of increase was only marginal, and largely in line with that of March. The April survey data also saw the availability of candidates to fill permanent roles increase again across the North of England, as has been the case since the turn of the year. In anecdotal evidence, recruiters blamed poor market conditions, including redundancies. It also showed that recruiters across the North of England pointed to a further rise in temp staff supply in April, thereby stretching the current period of expansion to 14 months. The local increase in temp staff supply was slower than that seen across the UK on average.
In regards to pay pressure, permanent starting salaries across the UK increased at a faster pace in April, as the rate of inflation accelerated to the quickest in four months. At the same time, hourly pay rates for temporary staff at the UK level rose at the quickest pace since June 2023, for the north of England this was the fifth successive monthly increase, with the inflation in hourly rate of pay being sharp (this being related to the increase in national minimum wage at 9.8%).
The Resolution Foundation has published its latest spotlight; A U-shaped legacy – taking stock of trends in economic inactivity in 2024. It found that the number of working-age adults who are economically inactive due to long-term sickness has been growing for over four years and stood at 2.7 million in November – January 2024, having peaked at a record high of 2.8 million a couple of months earlier. High economic inactivity remains the labour market legacy of the pandemic.
New research from leisure operator Better, paints a concerning picture of the toll that work is taking on the nation’s health. According to the research, Britons are working an average of 14 days of unpaid overtime per year, with two-thirds of respondents admitting to regularly working beyond their contracted hours. This equates to an extra two hours per week on average, with some individuals working as much as five extra hours per week, resulting in a staggering 35 days of unpaid work annually.
Personnel Today report on research by the Phoenix Group, a long term savings business, which found that 71% of working parents said they would increase their hours if they could access free childcare support and 64% of those currently out of work said they hoped to return to employment.
Parents of two-year-olds are now able to claim 15 hours of free childcare and from September, 9 month olds will also be in scope of this entitlement. This is expected to rise to 30 hours in September 2025. Recently only 1 in 3 councils have said they have enough childcare places to support full-time workers.
The Health Foundation report on Inequalities in unemployment found that despite unemployment being lower than in 2017, differences between some groups remain wide:
- Younger age groups are generally more likely to experience unemployment
- Adults from Pakistani/Bangladeshi, black and mixed ethnicity backgrounds are more than twice as likely to be unemployed as white adults
- The unemployment rate for men is slightly higher than for women
- There are big differences in unemployment rates between UK regions and nations
Speaking at the Centre for Social Justice, Prime Minister Rishi Sunak said benefits had become a ‘lifestyle choice’ for some workers, and promised to ‘significantly reform and control welfare’ if the Conservative Party form the next government. Planned reforms include shifting the responsibility for issuing fit notes away from GP’s and removing benefits for people who fail to engage in the search for work. Of those who are economically inactive, half have depression or anxiety, while the biggest proportional increase as a result of long-term sickness came from young people. Some 11 million sick notes – officially referred to as fitness to work notes – were issued last year, with 94 per cent assessing patients as unfit for work. The Prime Minister promised that should the Conservative Party form the next government, they will ‘significantly reform and control welfare’, setting out details of a number of planned reforms:
- Tightening the Work Capability Assessment such that benefit recipients with less severe conditions will be expected to engage in the world of work, and be supported to do so
- Changing the ‘sick note’ culture and shift testing the responsibility for assessment from GPs to specialist work and health professionals
- Anyone working less than half a full-time week will now have to try and find extra work in return for claiming benefits
- Anyone who doesn’t comply with the conditions set by their Work Coach, such as accepting an available job will, after 12 months, have their claim closed and their benefits removed entirely.
- Address mis-use of Personal Independence Payments, particularly in respect of supporting those with mental health conditions.
- Using developments in modern technology to crack down on exploitation in the welfare system and treat benefit fraud in the same way as tax fraud
Immigration Update
New laws to cut migration have now come into force. UK businesses are now required to pay overseas workers coming to the UK on a Skilled Worker visa significantly more, as the government clamps down on ‘cut price foreign labour’ in an attempt to deliver on its commitment to drive down net migration. The general salary threshold for those arriving in the UK on a Skilled Worker visa has now increased by 48%, from £26,200 to £38,700. A new immigration salary list (ISL) has been created, following advice from the expert and independent Migration Advisory Committee (MAC). Roles on the list will only be included where they are skilled and in shortage. The full updated guidance for sponsors is now available
The House of Commons Library published its latest research briefing on the Migration Statistics. The latest estimates suggest in the year ending June 2023, 1.2 million people migrated into the UK and 508,000 people emigrated from it, leaving a net migration figure of 672,000. In the year ending June 2023, there were:
- 0 million people living in the UK who had the nationality of a different country
- 4 million EU nationals (excluding UK) living in the UK
As of 2019, there were around 994,000 UK nationals living in EU countries
The Home Office has published information on the phasing out of physical Biometric Residence Permits, which are being replaced with e-Visas over the course of this year. This will mean that workers will not have a physical BRP.
Employers cannot accept physical BRP cards as evidence of the holders right to work in the UK, but must instead ask applicants for their share code, which can then be checked online. Some BRP holders are not aware that they have an eVisa, since they have never used one.
From April 2024 BRP holders are being emailed directly with instructions on how to create an online UKVI account to access their eVisa. These email invitations are being sent in phases, before the service is made available to all BRP holders in the summer. BRP holders should visit www.gov.uk/evisa for the latest information. The Home Office has made a Partner Pack available for employers which contains a range of factsheets and resources with more information on the switch to eVisas, including factsheets which can be shared with workers and applicants.
The European Commission wants to negotiate a new reciprocal agreement with the UK that would allow EU citizens under the age of 30 to live, work and study in the UK for up to 4 years. The commission’s plan has still to be agreed by EU leaders and would then be subject to negotiation with the UK. At present, there is no general visa route for EU citizens to work in the UK, and UK citizens wishing to stay longer than 90 days in an EU country must apply for an appropriate visa. Under the same proposals, Brussels also wants EU students to be treated the same as British students at UK universities and avoid paying international fees. The commission’s plan still has to be agreed by EU leaders and would then be subject to a negotiation with the UK.
References
https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment
https://www.resolutionfoundation.org/app/uploads/2024/03/U-shaped-legacy.pdf
https://www.better.org.uk/lp/workplace-wellbeing
https://www.personneltoday.com/hr/working-parents-childcare-access-phoenix-group/
https://www.gov.uk/government/news/new-laws-to-cut-migration-and-put-british-workers-first-in-force
https://www.gov.uk/government/speeches/prime-ministers-speech-on-welfare-19-april-2024
https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/