Labour market stalls: Skills and training are key

Unemployment up, vacancies down – but the real story is structural

The latest data from the Office for National Statistics (ONS) paints a sobering picture of the UK labour market. Unemployment has edged up to 4.8%, its highest level since the pandemic, while job vacancies have fallen for the 39th consecutive period to 717,000. Although economic inactivity has dipped slightly, the overall message is clear: the labour market is cooling, and the UK economy remains sluggish.

Yet, beneath the surface, a more complex story is unfolding - one that demands a long-term response rooted in skills, training, and inclusive employment.

A labour market in transition, not in freefall

The current labour market challenges are not just cyclical - they’re structural. The shift in employment patterns is reshaping the workforce:

• Public sector employment is rising, particularly in health and social care - likely a response to an ageing population.

• Private sector roles in foodservice and accommodation have shrunk by around 90,000 over the past year, reflecting both weak demand and automation.

• Young adults are finding it harder to transition from education to employment, risking long-term disengagement from the labour market.

These trends underscore the need for targeted interventions - not just to fill vacancies, but to future-proof the workforce.

Real wages up, but for how long?

While average pay growth remains above inflation, offering a modest boost to real incomes, the margin is narrowing. Wage growth has slowed to 4.7%, and real pay growth is now just 0.6% - its lowest in two years. This suggests that the window for consumer-led recovery may be closing, especially as inflationary pressures persist in essentials like food and housing.

Training for a resilient workforce

IGD’s People programme is designed to address exactly these challenges. With over 4 million people working across the UK food system, we help attract and upskill talent to meet future needs. From our Mmmake Your Mark campaign to school workshops and tailored learning programmes, we’re inspiring the next generation and supporting hundreds of businesses to build future-fit teams by:

• Supporting young people to develop the skills needed for meaningful employment.

• Helping businesses attract and retain talent in hard-to-fill roles.

• Promoting inclusive recruitment and progression pathways.

As the labour market tightens and the economy evolves, investing in people is not just a social good - it’s an economic imperative.

What needs to happen next?

To build a labour market that works for everyone, IGD calls for:

1. Expanded access to training - especially for young people and those in declining sectors. See our New Starter and Line Manager free learning courses.

2. Closer collaboration between industry and education to align skills with future demand.

3. Policy support that rewards employers investing in workforce development.

Final word

The UK labour market may be in the doldrums, but it’s not adrift. With the right focus on skills, training, and inclusive employment, we can steer towards a more resilient and productive future. IGD is proud to be part of that journey.