Employers could still be struggling to access the candidates they need despite signs recruitment activity is slowing down, as unemployment in the UK reaches its lowest level since 1974.
The latest official labour market estimates from the Office for National Statistics show that June to August 2022 saw the largest quarterly fall in job vacancies since the same period in 2020. Compared to the previous quarter there were 34,000 fewer vacancies posted, down 2.6%.
Yet, demand for candidates in industries including electricity, gas, steam and air conditioning supply; public administration and defence and compulsory social security; education; and health and social care continued to increase.
The figures suggest that for those still hiring, problems persisted in May to July 2022 as the unemployment rate fell to 3.6% and candidate availability shrunk as the number of full-time employees rose.
The number of people unemployed for up to six months fell to a record low and the economic inactivity rate increased by 0.4 percentage points to 21.7%, mainly driven by people who said they were students or had long-term illnesses that prevented them from working.
Payrolled employees also increased to a record 29.7m in August, up 71,000 on revised July figures, while the number of “workforce jobs” – the official measure of jobs the UK – rose to a record 35.8m.
Labour market and recruitment
Jack Kennedy, UK economist at job site Indeed, said the figures suggested the labour market was losing its momentum.
“There remains extreme tightness with vacancies nonetheless remaining near record levels and economic inactivity reversing its recent falls to rise to its highest level since 2016. This was caused by people at opposite ends of the career ladder; largely driven by those aged 16 to 24 years and those aged 50 to 64 years. This participation gap in the labour market means hiring became even more challenging for employers,” he said.
Ben Keighley, founder of social media recruitment specialist Socially Recruited, said: “While vacancies remain high they are falling in two-thirds of sectors, as economic uncertainty is leading many businesses to consider recruitment freezes.
“Employers looking to bolster their workforce must widen their search to include those not actively looking for roles and go to greater lengths to recruit talent as soaring inflation takes a larger bite out of wages.”
Ben Harrison, director of the Work Foundation at Lancaster University, said many workers could be concerned about job security as energy prices rise.
“There will be anxiety for those workers in industries vulnerable to soaring energy prices as the six-month employer support package fails to provide longer term security. It is vital that when the Chancellor delivers his Budget in the coming weeks he provides more clarity on how these sectors can be supported, and how the government intends to restore the UK economy to growth.”
Real pay continues to fall
Real pay continued to fall in May to July 2022. Adjusted for inflation, total pay – which includes bonuses – fell 2.6% and regular pay was down 2.8% compared to the same period last year. The decline in real regular wages was slightly smaller than the record fall reported last month (3.0%), but remains among the largest falls in pay growth since comparable records began in 2001.
Average regular pay growth for the private sector was 6% in May to July 2022 and 2% for the public sector. Outside of the height of the pandemic, this is the largest difference observed by the ONS since records began.
Lauren Thomas, UK economist at Glassdoor, said inflation, energy and economic concerns are major worries for employees.
“In the six months since February 2022, mentions of energy/heating and layoffs/redundancies have increased 33% and 81% respectively in employee discussion on Fishbowl by Glassdoor. Concerns about the cost-of-living crisis have also grown sharply, with negative mentions of cost of living or inflation growing over four times since December of 2021,” she said.