What Do The Latest Ons Labour Market Figures Mean For Hr?

The latest figures released by the ONS this morning show that the UK’s unemployment rate has remained unchanged despite the tough economic landscape, remaining at 3.7 percent until January.
March 14, 2023
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The UK employment rate was estimated at 75.7 percent in November 2022 to January 2023, 0.1 percentage points higher than the previous three-month period.

Pay rolled employees for February 2023 shows another monthly increase, up 98,000 on the revised January 2023 figures, to 30.0 million.

The unemployment rate for November 2022 to January 2023 was largely unchanged on the quarter at 3.7 percent.

The economic inactivity rate decreased by 0.2 percentage points on the quarter, to 21.3 percent in November 2022 to January 2023.

In December 2022 to February 2023, the estimated number of vacancies fell by 51,000 on the quarter to 1,124,000. Vacancies fell on the quarter for the eighth consecutive period.

Growth in average total pay (including bonuses) was 5.7 percent and growth in regular pay (excluding bonuses) was 6.5 percent among employees in November 2022 to January 2023.

HRreview has gathered expert insights into what the latest ONS labour market statistics mean for HR.

Bradley Post, CEO of finance experts, RIFT, states:

Given the current economic outlook, a third consecutive freeze in the level of unemployment seen across the UK is certainly positive and demonstrates the resilience in our labour market.

However, growth in the basic rate of pay dipped for the first time in around a year and this will be cause for concern for many households who are already stretched extremely thin financially, with the current high cost of living showing no signs of easing anytime soon.

Fingers will be firmly crossed that some relief will come via this week’s spring statement, but a reduction in earnings growth is the last thing anyone wants to see, or can afford, at present.

The statistics indicate a cooling labour market, as vacancies continue to fall

Jonathan Boys, Senior labour market economist for the CIPD, the professional body for hr and people development, comments:  

Some measures suggest a cooling labour market. Vacancies continue to fall for the eight consecutive time indicating a softening of demand for staff, but unemployment remains incredibly low at 3.7 percent indicating there are fewer available candidates. This highlights the need for the Chancellor’s Budget to focus on a broad range of measures to boost labour market supply and help more people to get back into work.”

“Pay is still rising but prices are rising faster and each month the cost-of-living crisis casts more gloom on family finances. Though inflation is coming down, prices still rose by 10.1 percent, eclipsing today’s figures which show regular pay growing at 6.5 percent. A pattern that we are getting used to now is the gap between public and private sector pay. The former grew at just 4.8 percent, while the latter grew by 7 percent. This will make recruitment and retention in the public sector harder as time goes on.

“Ahead of the Budget, policymakers will be considering how to boost labour supply to ease shortages and ensure growth. Today’s stats show that although the economic inactivity rate decreased, it remains 1.1 percent higher than pre-pandemic. Policymakers should focus on boosting labour supply from all age groups, and there is an urgent need to reform the Apprenticeship Levy into a training and skills levy. This is reinforced by CIPD research, which finds that there are more 16-24-year-olds not working but who would like to work, than there are 50-64-year-olds, despite the latter being the focus of reducing economic inactivity. More funding is needed for apprenticeships for young people and increased flexibility for employers to train their existing workforce through other forms of training and development.”

Kate Shoesmith, Deputy chief executive of REC, says:

Unemployment remains historically low, with vacancies well above pre-pandemic levels and economic inactivity still above the pre-covid rate – so there is plenty of work to be done by the Chancellor tomorrow. It is encouraging that pre-Budget signals from the Treasury will use some of the levers available to Jeremy Hunt to address these issues – nowhere is it more needed than in better, more affordable childcare support.

Our analysis shows that labour and skills shortages could cost the UK economy up to £39 billion per year from 2024 – around the same as two Elizabeth lines. Government and business must reach out and help those furthest away from the labour market into work if we are to fill new job vacancies – which our own data shows hit a 14-month high in February.

“Firms can also step up on how they employ and engage. The government can help businesses by taking the big opportunity in the Budget tomorrow to provide clarity and stability on its growth plans. It is a big test for the Chancellor on skills, transport and tax. We need to see creative and revitalised policies on tackling economic inactivity, from rethinking low-skilled immigration policy to support for the over 50s.”

Glassdoor economist, Lauren Thomas, comments:

“Wage growth may be hitting record highs, but this is not being felt in workers’ pockets. Glassdoor’s data shows discussion around inflation and the cost of living is up 171 percent year-on-year. Employers need to consider how they can help their workforce through this difficult period – whether that’s through pay rises, other benefits, or improving working conditions. Although unemployment rates have risen recently, they’re still very low. The Chancellor will have his work cut out for him in the spring budget; early retirement and long-term illness are continuing to contribute to high economic inactivity. All of this means one thing – hiring remains difficult and employees have the power to vote with their feet, so employers can’t be complacent.”

Joanne Frew, Global head of employment and pensions at DWF, says:

The latest employment ONS figures for the period November 2022 to January 2023 continue to demonstrate a stable labour market.  The highlights for the period show a UK employment rate of 75.7 percent, 0.1 percent higher than the previous quarter.  The UK unemployment rate was estimated at 3.7 percent, largely unchanged compared with the previous quarter.  The UK economic inactivity rate was estimated at 21.3 percent, 0.2 percent lower than the previous three-month period.  The World Cup reportedly helped the UK avoid a recession and will also have undoubtedly helped to maintain the resilient employment rate during this period as pubs and restaurants experienced a surge in trade.

“Despite a relatively stable market there is still a large degree of industrial unrest, with junior doctors taking part in a three-day strike this week.  In addition to industrial action, attraction and retention of staff remains a cause for concern for employers as the cost of living crisis continues to bite.  Employees are demanding more pay and it is often the case that the employer simply cannot meet the demand.  Employee engagement has never been more important.  Employers are looking at new and innovative ways to attract and retain talent – from increased flexibility such as “work from anywhere” policies to offering employee discount schemes.

“Whilst retaining a core productive workforce is key, inevitably some employers will be considering restructuring in the near future which will impact the labour market in the short to medium term.  Further, the latest figures show that between December 2022 and February 2023, the estimated number of job vacancies fell by 51,000 over the quarter, with economic pressures resulting in a cautious approach to recruitment.  However, overall the number of vacancies remains high increasing the pressure on the Government to encourage people who have dropped out of the working population to return to the job market.”

Original Article: HRreview

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