The latest labour market statistics reveal a mixed picture of the UK economy, with a blend of modest gains and ongoing challenges.
Despite a decline in the number of job vacancies, which continue to be 11 percent higher than pre-pandemic levels, the unemployment rate has slightly improved compared to last year. Additionally, there has been a slight uptick in the total number of people employed and those on payrolls in the most recent quarter.
A detailed analysis of the Annual Growth Rate Comparisons dataset, which draws from HM Revenue and Customs Pay As You Earn (PAYE) Real Time Information (RTI) and Labour Force Survey (LFS) estimates, paints a subdued picture. Although there is growth in payrolled employees, the overall number of employed individuals has decreased compared to the previous year, indicating a slowdown in the job market.
Earnings growth, while still robust, has decelerated slightly, with regular pay rising by 5.4 percent in the three months leading up to June 2024. However, total earnings growth has seen a significant drop due to the absence of last year’s NHS bonus payments.
In more detailed figures, payrolled employees in the UK saw a minor increase of 14,000 (0.0%) from May to June 2024, and a more substantial rise of 227,000 (0.8%) year-on-year. Preliminary estimates for July 2024 suggest a further increase of 24,000 (0.1%) on the month and 252,000 (0.8%) over the year, bringing the total to 30.4 million. These figures are provisional and subject to revision.
How should the labour market data be interpreted?
However, the Labour Force Survey (LFS) data should be interpreted with caution due to increased volatility from smaller sample sizes. The employment rate for those aged 16 to 64 was estimated at 74.5 percent for April to June 2024, showing a slight improvement in the latest quarter but remaining below last year’s figures. The unemployment rate dropped to 4.2 percent, also slightly lower than a year ago, while economic inactivity remained largely unchanged at 22.2 percent.
The Claimant Count for July 2024 rose to 1.801 million, reflecting recent policy changes, including an increased administrative earnings threshold for work search conditionality, likely affecting around 180,000 claimants over six months. Meanwhile, the number of job vacancies continued to decline, down by 26,000 to 884,000 for May to July 2024, marking the 25th consecutive quarterly fall but remaining above pre-COVID-19 levels.
In response to these figures, James Cockett, Senior Labour Market Economist for the CIPD, emphasised the sustained pressure on wages despite slower growth. He highlighted the ongoing difficulties employers face in recruitment, underscoring the need for government collaboration with the business community to ensure labour market flexibility and opportunities are preserved.
Neil Carberry, Chief Executive of the Recruitment and Employment Confederation (REC), also commented on the cooling job market, noting the normalisation of vacancies to pre-pandemic levels and the implications of slowing pay growth for economic policy. He stressed the importance of government action to address the high levels of economic inactivity and to ensure that regulatory changes do not hinder job creation for those in need.
The report concludes with a note on industrial action, with an estimated 100,000 working days lost due to labour disputes in June 2024, primarily within the health and social work sector.
As the UK navigates these complex labour market dynamics, both policymakers and businesses will need to work closely to foster a resilient and inclusive job market that supports long-term economic stability.
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.
