The number of job vacancies are falling as more people are looking for work, show the latest ONS labour market statistics.
Between January to March 2023, the number of vacancies was 1,105,000.
This is a decrease of 47,000 from October to December 2022.
However, the total number of vacancies from January to March 2022 remain 304,000 above their pre-coronavirus January to March 2020 levels.
According to the latest statistics, December 2022 to February 2023 shows increases in the employment rate and the unemployment rate compared with the previous three-month period (September to November 2022).
Also, the UK employment rate was estimated at 75.8 percentage points higher than the previous three-month period. It was also 0.8 percent lower than before the pandemic (December 2019 to February 2020).
What do these statistics mean for HR and the wider job market? HRreview has gathered expert insights.
With labour shortages still plaguing the UK, employers must focus on providing quality jobs
Jonathan Boys, labour market economist for the CIPD, the professional body for HR and people development, comments:
“The UK continues to experience labour shortages as the workforce remains smaller than it was pre-pandemic. Increased industrial action shows that many people aren’t satisfied with their jobs, and it’s not just about pay. Excessive workloads and a lack of flexibility also undermines people’s wellbeing and work-life balance, which has led to large numbers of people dropping out of work completely. Employers must focus on providing quality jobs with flexibility, autonomy and meaning to retain and attract staff.
“While the stats show employers are reining in hiring, citing economic pressures as a reason for fewer vacancies this month, the number of vacancies remains much higher than pre-pandemic. The ratio of unemployed people per vacancies is 1:2. This means there are not enough people to fill vacancies and recruitment remains tough.
“Annual pay growth of 6.6 percent should be a win for workers but with prices rising by 10.4 percent they continue to experience a real terms pay cut. The gap between private and public sector pay growth remains but has narrowed considerably in recent months suggesting that industrial action, or the threat of it, may be working.”
Inflation is eating average earnings up
Ben Keighley, founder of social media recruitment specialist Socially Recruited comments:
“Forget death or taxes, for now nothing feels more certain for UK workers than inflation taking a huge bite out of their wages every month.
“Average earnings have been swelled by a tight labour market, but neither the public or private sector can keep up with the cost of living, which is more than offsetting any bonus.
“Vacancies continue to dwindle across the majority of sectors, belying the traditional winter hiring boost, and there is a sense that many companies are treading water, waiting to see which way the economy turns.
“However these numbers are still far above pre-COVID levels, and with so many roles remaining unfilled and high levels of economic inactivity the onus is on employers to do more to bring different groups back into the workforce.”
Employment levels are rising: are things looking up?
Michael Stull, Director at ManpowerGroup, said:
“We’re seeing employment levels move back towards something of an equilibrium following the record job vacancy highs seen this time last year. As demand gradually reduces in terms of advertised vacancies, ideally, we’d like the supply of workers to move upwards and help soften the landing.
“Staffing shortages across the skills spectrum – whether for entry-level or highly qualified roles – continue to be a cause for concern in nearly every sector. When combined with the slight rise in unemployment and high long-term sickness levels, alongside increasing financial pressures and ongoing industrial action (for example, in healthcare), these shortages present complex retention and recruitment conditions for many employers.
“Candidates are under their own pressures in these economic headwinds, but one advantage they continue to hold, is choice. Many are looking for increased flexibility, a steady income, and training and upskilling opportunities. Employers who seek to match these needs and hire based on potential rather than previous experience will hold the keys to a brighter future.”
Jack Kennedy, UK Economist at global hiring platform, Indeed, says:
“Though optimism has been rising that the UK economy will avoid recession this year, we continue to see the labour market coming off the boil. Vacancies fell for the ninth consecutive month to 1,105,000, though remain well above pre-pandemic levels.
“Regular wage growth remains high at 6.6 percent y/y but eased back from 6.7 percent and, after accounting for high inflation, real wages continued to be squeezed at one of the sharpest rates on record at -2.3 percent y/y. The gap between private (6.9%) and public (5.3%) sector regular wage growth continued to narrow, with the latter picking up to the strongest since 2005.
“We saw a further 0.4 percentage point drop in inactivity in the latest figures to 21.1 percent, the biggest drop in nine months, mainly driven by 16-24-year-olds as more students returned to the labour force. But inactivity due to long-term sickness continued to increase, hitting a new record high. Overall inactivity remains over 420,000 above pre-pandemic levels. The Chancellor made inactivity a focus in last month’s Budget, though the OBR estimates that his package of reforms may only lower inactivity by about 100,000 and will take several years to take full effect.
“One measure of labour market tightness, the ratio of unemployed people to vacancies, remains close to historic lows at just 1.2. But that may not give the whole picture if employers aren’t as determined to fill those vacancies as they were before.
“At Indeed, we’re seeing some signs that employers have started to scale back their recruiting intensity. For example, employers’ use of signing bonuses, which soared during acute worker shortages, has reduced as competition for new hires abates. Today, the share of job postings offering a joining bonus has dipped below 0.9 percent, from a peak of 1.1 percent in November.”
A skills reform is needed
Neil Carberry, Chief Executive of REC, comments:
“The jobs market remains buoyant with activity levels well ahead of pre-pandemic, even if things are not as fizzy as they were in 2022.
“The ONS rightly attributes slower hiring to employers feeling more risk-averse because of the sluggish economy. To counteract this, firms are tapping into the UK’s pool of high-quality temporary workers to help them grow.
“Pay is rising strongly, in response to both price rises and hiring challenges, but not at a rate that will cause further inflation.
“Though falling, both vacancies and economic inactivity remain well in advance of pre-pandemic levels. This means the defining feature of our labour market right now is still labour shortage, with total hours worked still below their pre-pandemic level. Addressing this shortage will be vital to getting the economy growing.
“The recent Budget was right to put the challenge of labour availability at the heart of the UK growth story. While moves on childcare were helpful, there is a lot more still to do, especially around skills reform and supporting those who want to work in more flexible ways, including contracting and agency work.”
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 the 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.