The level of UK unemployment has unexpectedly increased to its highest rate since September 2021, according to June 2024’s labour market figures from the Office for National Statistics.
In the February to April 2024 quarter, the unemployment rate was 4.4%, up from the previous figure of 4.3%.
The big challenges of the next decade such as pursuing net zero and providing public services will require a focus on the workforce” – Jon Boys, CIPD
The economic inactivity rate for 16 to 64-year-olds stood at 22.3%, up 0.3 percentage points on the previous quarter, up 0.8pp on the previous year, and up 1.7pp on pre-pandemic levels.
The ONS said this month’s labour market statistics continue to indicate signs of a cooling labour market, with the number of job vacancies still falling and relatively strong wage growth.
April’s higher national living wage rates for people aged 21 and above meant average wage growth stood still, the first time it has not fallen in almost a year. This could delay an expected cut in interest rates this summer.
Annual growth in regular earnings (excluding bonuses) was 6.0%, the same as for the previous three-month period, while annual growth in average total earnings (including bonuses) was 5.9%, the same as for the previous three-month period.
Real-terms regular earnings growth, adjusted for the consumer prices index including housing costs (CPIH), grew by 2.3%, and total earnings by 2.2%.
UK labour market June 2024
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Public sector wage growth remains strong at 6.4%, higher than the private sector at 5.8%, which has seen lower figures for nearly two years (5.4% for April to June 2022).
The number of job vacancies decreased by 9,000 to 904,000.
Jon Boys, senior labour market economist for the CIPD, said that unemployment remains at a “historically very low” level and vacancies continue their long-term downward trend.
“This reflects that there is less churn in organisations than there was immediately after the pandemic and therefore a lesser need to hire to replace lost staff,” he said.
“Big economic shocks like a pandemic require a quick response and innovative solutions but the slow and steady labour market we now find ourselves in gives employers and policymakers time to react. The big challenges of the next decade such as pursuing net zero and providing public services will require a focus on the workforce.”
Neil Carberry, chief executive of the Recruitment and Employment Confederation, said: “Employers played it cool in the face of economic and political uncertainty this Spring. Business surveys suggest this is starting to change, but overall vacancies remained ahead of pre-pandemic levels even during the early months of the year.
“Businesses tell us they are confident about hiring – but they are watching inflation, interest rates and the general election for signals on when to go. There has certainly been a marked improvement in mood in the hiring market since Easter.”
Rebecca Florisson, principal analyst for the Work Foundation at Lancaster University, said: “Today’s labour market data shows there will be no time for complacency for the next government as the UK has a smaller workforce that is poorer and sicker than in 2019.”
Carberry added: “The number of people who are economically inactive remains a major challenge. In July, a newly elected government will need to act quickly on labour supply or risk a £39bn cost to the economy per year because of labour and skills shortages – just short of two whole Elizabeth Lines.
“All parties should use their manifestos to set out a workforce plan that can help businesses shape our workforce for the future. This should involve lowering barriers on skills, support infrastructure such as childcare and transport, regulation, immigration and tax.”
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