Job vacancies in January to March 2022 reached yet another record, 1.28 million. Yet this demand for candidates is not being reflected in wage growth, which is not meeting the rising cost of living.
The latest labour market figures from the Office of National Statistics (ONS) showed that the number of vacant positions increased by 50,200, although the rate of growth in vacancies has continued to slow down.
The largest rise in job vacancies in January to March 2022 was seen in human health and social work. This followed the introduction – and later withdrawal – of mandatory Covid-19 vaccinations for those employed in social care and frontline health workers.
The candidate pool remained limited, with the employment rate unchanged from the previous quarter at 75.5%, and the unemployment rate for December 2021 to February 2022 decreasing by 0.2 percentage points to 3.8%. The number of people out of work for up to 12 months fell to a record low.
An estimated 29.6 million people were on organisations’ payrolls – also a record.
Despite the demand for staff, the figures suggest that employers have not increased pay to offset the rising cost of living and attract candidates. Real-terms regular weekly pay, which excludes bonuses, for December 2021 to February 2022 fell by 1% compared with last year, while total pay including bonuses grew by just 0.4%.
However, the ONS said these pay figures should be interpreted with caution, as recent levels of average weekly pay are being compared with a period in which many employees were on furlough.
The consumer prices index (CPI) measure of inflation reached 6.2% in the 12 months to February 2022 – a 30-year high.
A gap has also emerging between public sector and private sector pay. Regular pay in the private sector grew by 4.7% compared to 1.7% in the public sector in the year to February 2022.
Pay squeeze yet to come
Jonathan Boys, labour market economist for the CIPD, warned that the “big pay squeeze” was yet to come. If the gap between public and private sector pay persists, he suggested that public sector employers may struggle to compete for talent.
Recruitment and candidate attraction
“Today’s statistics look backwards but it’s what’s to come that is concerning. The OBR is forecasting that inflation could reach 8.7% this year. The big pay squeeze is still in the pipeline,” he said.
“Employers have a big role to play in supporting their staff through this time. If the ability to award pay rises is limited, employers can look at the total employment offer. This includes designing jobs that include ample flexible working options. Financial wellbeing support can make a difference, as can revisiting the mix of benefits offered to make sure they work hard for employees, especially the lowest paid.”
Neil Carberry, chief executive of the Recruitment and Employment Confederation (REC), said: “Pay setting this year will be hard for businesses, with their costs increasing across the board as tax and uncapped energy prices rise. Firms will need to balance this with the knowledge that they want to protect staff who are facing similar rises.”
Attract the economically inactive
Carberry noted that economic inactivity rate had increased by 0.2 percentage points to 21.4% in December 2021 to February 2022. He said it would be important for employers to find ways to tempt some of this population – which includes people who are looking after their family or are on long-term sick leave – back into work.
“Luckily we also have a thriving temporary work market that is proving its worth by helping firms bridge the gap. Businesses who want to hire permanently will need to find new and creative ways to attract new people and look after the staff they have – consulting with a recruitment expert is an important way to get the best advice on this,” he said.
James Reed, chairman of jobsite Reed.co.uk, said: “There are now 8.8 million people who are economically inactive in the UK, which is 600,000 more than at the start of the pandemic. This is a symptom of what I call ‘The Great Lie Down’, with many workers leaving the workforce altogether, some through long-term sickness and others preferring early retirement or different lifestyle choices. If these workers are to be coaxed back, they will need convincing with attractive employment arrangements, higher wages and better conditions and benefits.
“Currently, less than 20% of these people who are economically inactive say they would like a regular, paid job. However, if it was possible to help this group find work then that would be of great benefit to both them and the economy.”
Organisations should consider more “imaginative” packages for their employees, suggested Anthony Painter, director of policy and external affairs at the Chartered Management Institute.
Currently, less than 20% of these people who are economically inactive say they would like a regular, paid job. However, if it was possible to help this group find work then that would be of great benefit to both them and the economy.” – James Reed, Reed.co.uk
Kieran Boyle, managing director of Gloucester-based recruitment firm CKB Recruitment, said employers must consider the impact the pandemic has had on workers’ preferences if they want to attract the best talent.
“This is easily the most candidate-driven market we have ever experienced. The fight for talent is being won by the companies who have embraced flexible working, as people now want this as a rule,” he said.
“The firms who have stuck to wanting everyone in the office five days a week are really starting to struggle to attract the best talent, as well as retain it. Post-pandemic lifestyle changes have seen the amount of people already in a job looking elsewhere go through the roof.”