The UK employment rate has hit a new milestone, reaching an estimated 76 percent during the period of February to April 2023, according to the latest ONS labour market statistics.
This represents a 0.2 percentage point increase compared to the previous quarter from November 2022 to January 2023. The latest data reveals a surge in the number of people in employment, with both employees and self-employed workers contributing to the record-breaking figures.
According to the more recent estimate for May 2023, the number of payrolled employees experienced a monthly increase of 23,000 individuals, bringing the total to 30.0 million. However, it is important to note that this figure is provisional and subject to revision as more data becomes available next month.
Unfortunately, the unemployment rate for the period of February to April 2023 witnessed a slight uptick of 0.1 percentage points, standing at 3.8 percent. This increase primarily stems from individuals who have been unemployed for up to 12 months.
On a positive note, the economic inactivity rate decreased by 0.4 percentage points during the same quarter, reaching 21.0 percent in February to April 2023. Analysing the reasons behind economic inactivity, the decline was mainly driven by individuals who were inactive due to reasons other than unemployment, as well as those who were engaged in family or home responsibilities. However, there was a notable increase in individuals reporting long-term sickness as the cause of their economic inactivity, reaching a record high.
What about job vacancies?
During the period of March to May 2023, the estimated number of job vacancies dropped by 79,000 compared to the previous quarter, totalling 1,051,000. This marks the 11th consecutive quarter of decreasing vacancies, reflecting industry uncertainty. Survey respondents continue to cite economic pressures as a factor impeding recruitment.
In terms of wages, the growth in average total pay, including bonuses, was 6.5 percent among employees in February to April 2023. Additionally, regular pay, excluding bonuses, experienced significant growth of 7.2 percent during the same period. This represents the highest growth rate observed for regular pay outside of the coronavirus (COVID-19) pandemic.
Total pay declined
However, when adjusted for inflation, the real terms data shows a decline in both total pay and regular pay in February to April 2023. Total pay fell by 2.0 percent, while regular pay saw a 1.3 percent decrease compared to the previous year.
Also, the report indicated that in April 2023, there were 257,000 working days lost due to labour disputes.
However, there was positive news for workforce jobs, which experienced an unprecedented increase of 395,000 during the first quarter of 2023, bringing the total to a new record high of 36.8 million. Of the 20 industry sectors analysed, eight reached record-high levels of employment.
As the UK job market continues to evolve, these statistics provide valuable insights into the current state of employment and offer a glimpse into the challenges faced by different sectors and workers.
Meghan Farren, General Manager, KFC UK & Ireland, says:
“While today’s labour market figures show the number of people in employment is rising and vacancies are falling, what they don’t show are the skills and training needed to keep businesses and industries moving.
“While there are buckets of talent across this country, for many years the UK has underinvested in young people. We believe untapping the potential of the UK’s youth could provide the solution to filling these open roles, growing businesses like ours, improving access to opportunity and creating social mobility in all corners of the UK.
“65 percent of our 29,000-strong workforce are under the age of 25, so we know all too well the barriers young people face when they enter the world of work and the skills they need to adapt to the workplace.
Through our youth employability programme Hatch, we’re calling for focused investment from businesses and government to give the next generation the tools, skills and support they need to enter and thrive in the workplace.”
Jack Kennedy, UK Economist at the global hiring platform, Indeed, comments:
“The latest ONS figures show rising pay pressures which will be of concern to the Bank of England as it seeks to calm a wage-price spiral. Regular wage growth accelerated to 7.2 percent year-on-year in the three months to April, the highest rate outside the pandemic period. Private sector wage growth jumped to 7.6 percent while public sector wage growth was at 5.6 percent. Rising pay pressures are in line with Indeed’s real time data released in our monthly Wage Tracker and point to the need for further monetary policy tightening from Threadneedle Street.
“Though minimum wage increases and recently agreed public sector pay deals are drivers, it’s also a reflection of continued tightness in the labour market, with the unemployment rate unexpectedly dipping to 3.8 percent and a historically low 1.2 unemployed jobseekers for every vacancy.
“Though worker shortages have eased, with vacancies falling for the eleventh consecutive month in May, they are likely to remain a long-term issue. Inactivity among working age people remains almost 350,000 above its pre-pandemic level despite having dropped nearly 300,000 from its peak last summer. Inactivity due to long-term sickness remains a key concern, hitting a new record high in the latest period at over 2.5 million.”
Enrico Sanna, CEO, The Office Group, says:
“Today’s findings are further proof that the landscape has changed. The workplace is no longer solely centred around the desk – employers now need to create well-designed, engaging environments that offer tangible benefits to physical and mental wellbeing, and encourage productivity.”
“It’s clear that employers need to do more to address workers’ physical and mental wellbeing and this shouldn’t be just a tick box exercise. A holistic approach to wellbeing in workspaces – through a standout customer experience, quality facilities and amenities – is now needed. Today, companies want spaces conducive to employee comfort and wellness and staff are enjoying the ‘perks’ or ‘day out’ element of a trip to the office.”
“In an era of hybrid and flexible working, the office remains a ‘must have’ for human connection, something that cannot be replicated at home. With the ‘consumerisation’ of employment that we’ve witnessed, offices now need to be somewhere people actively choose to be. Employees expect more than they did before, they want a space that stimulates working relationships, generates energy and a buzz. This requires a bespoke offer to suit individual needs – an environment that enables people do their best work.”
John Gargan, Northern Ireland Regional Manager, ManpowerGroup UK, said:
“There has been a huge increase in the overall hiring intent of employers based in Northern Ireland, as the region continues to report significantly lower unemployment rates at 2.4 percent. This is half of the highest unemployment rates reported in both the West Midlands and Wales, at 4.8 percent.
“Northern Ireland’s Net Employment Outlook for Q3 (July to September) 2023 is +52 percent, which is an incredible rise of +31 percent percentage-points on the quarter, and 23 percentage-points above the UK’s overall Q3 Outlook. This confident hiring intent would typically be a sign of strong economic conditions characterised by jobs growth and opportunity. But as we know, the reality has been an economy of stagnation and rising costs over the past 18 months. In the context of Northern Ireland, it also framed by the region having the UK’s highest economic inactivity rate at 25.8 percent and so we’re seeing employment conditions that remain extremely tight with no signs of loosening.
“The challenge is particularly noticeable within businesses looking to fill freight and logistics roles, as well as transport planners and customs vacancies. In addition, manufacturers are seeking to hire more highly skilled roles in areas such as maintenance, automation and engineering. For many of these vacancies, candidates are proving much harder to find. This has led to an increase in the recruitment of skilled employees from overseas territories outside of the EU. But generally, those candidates that do make the grade in Northern Ireland are finding they have almost too many options to choose from at the moment.”
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.
