Labour demand may be falling

Date : 14 November 2023

New data from ONS suggests a further slight “softening” of the UK labour market, although the strategic picture remains a little unclear.

The number of unfilled vacancies fell from 981,000 in August to 957,000 in September. This is the 17th consecutive month of decline, although the number of vacancies remains well above the pre-pandemic level.

The number of redundancies is also rising slowly, with men more at risk from redundancy than women.

The rate of unemployment is edging up and now stands at 4.3%, versus 3.8% at the start of the year. Employment is falling and economic inactivity remains high.

These datasets suggest that demand for labour in the UK may be weakening a little, as might be expected with the economy in a fairly weak state.

More positively, pay growth is still strong, which is something of a paradox – with labour demand weakening, pay growth would normally be expected to slow.

Industrial disputes continue, especially in health and social care, suggesting that many workers feel confident enough to confront their employers over pay and conditions.

IGD Viewpoint:

Official data from ONS offers mixed signals about the state of the UK labour market. However, in view of the turmoil the economy has endured, it might be said that labour demand is actually surprisingly robust, which is good news for workers.

The food and grocery industry in particular remains in great need of workers at every stage in the supply chain and in all types of roles. IGD rarely encounters a business that is not challenged by a shortage of workers.

However, comparing current labour market data with “normal” data from the pre-pandemic period may be misleading. Clearly, the pandemic has driven social and economic changes which have changed the labour market permanently, in the UK and elsewhere. This has implications for both employers and the government.

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