In a departure from the usual trend, labour demand in December experienced a decline compared to previous years, signalling a shift in the dynamics of the job market.
Despite this dip, the economy continues to be buoyed by persistent labour shortages that are propping up economic activity.
According to the latest Recruitment & Employment Confederation (REC) and Lightcast Labour Market Tracker, December witnessed a decrease in labour demand, a departure from the upward trajectory observed in the same period in previous years.
Analysts attribute this dip to a variety of factors, including seasonal adjustments, economic uncertainties, and the evolving landscape of remote work.
Increased wages
While the decrease in demand may raise concerns, the silver lining lies in the ongoing challenge of labour shortages. Industries across the board are grappling with a scarcity of qualified workers, sustaining a competitive job market. This scarcity has led to increased wages and improved benefits as employers vie for a limited pool of skilled individuals.
Experts suggest that the dichotomy between lower demand and persistent shortages may be indicative of structural changes in the job market. The advent of remote work and the acceleration of digital transformation have altered the landscape of employment, with some sectors experiencing contraction while others face expansion.
“The lower labour demand we observe in December may be a reflection of a broader trend influenced by the evolving nature of work and economic conditions. However, the enduring labour shortages suggest a robust underlying demand for skilled workers, particularly in sectors experiencing growth,” explains REC Chief Executive Neil Carberry.
What is driving the demand for skilled labour?
Key sectors driving the demand for skilled labour include technology, healthcare, or manufacturing, where talent shortages are particularly acute. The push for innovation and adaptation to new technologies has created a demand for specialised skills that are in short supply.
As the economy continues to recover from the impacts of the pandemic, policymakers and businesses alike will need to navigate this nuanced employment landscape. Balancing efforts to address labour shortages with strategies to stimulate demand and support industries facing contraction will be crucial in fostering a resilient and inclusive job market.
While December’s labour demand shows a departure from historical trends, the ongoing labour shortages underscore the dynamic nature of the job market. Adapting to these changes will be essential for sustained economic growth and prosperity.
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.
