HRreview has gathered expert comments following the latest ONS Labour Market statistics report.
Glassdoor’s UK economist Lauren Thomas outlines some of the findings in the ONS Labour Market report:
Involuntary redundancies have increased but remain low. News reports and our own data on the discussion of redundancies suggest layoffs increased over the last few months. However, many industries are still facing hiring shortages and can simply cut back on hiring in the face of worsened economic conditions rather than resort to layoffs. Increased layoffs are likely to come mostly from industries like tech rather than healthcare and hospitality.
Also, economic inactivity has increased, driven by a rise in long-term illness and continually high numbers of students. The number of long-term sick have now reached a record high. Though numbers of students have decreased since last month’s report, they remain higher than earlier this year. In the autumn following the start of the pandemic, the UK saw a large increase in the number of full-time students as a reaction to the covid-induced weak labour market. Though the labour market remains strong, our data suggests public perception has become increasingly negative. This will drive those on the fence to choose education over work.
Vacancies have also dropped for the fourth month in a row. Worsening economic instability and a consistent shortage of employees mean that many employers can pull back on hiring rather than laying off current employees, and our data suggests many more employers are implementing hiring freezes. However, in industries like healthcare where shortages are a long time in the making and demand is unlikely to fall much, vacancies have remained high.
Lauren Thomas, Glassdoor’s UK Economist said:
“As news of tech layoffs spreads, Glassdoor’s data shows that employees are increasingly anxious with discussion of layoffs doubling and mentions of recession up tenfold from last October. Hiring has also taken a hit, with mentions of hiring freezes up more than 450 percent.
“However, this isn’t 2008. Unlike the Great Recession, the current shortage of workers is much more acute and even a potential recession would be unlikely to result in the same peak of unemployment as we saw then. There are reasons to be hopeful – vacancies are likely to remain higher and both redundancies and unemployment are lower than before the pandemic.”
Joanne Frew, Global Head of Employment & Pensions at DWF, comments:
“The latest ONS figures show a steady labour market despite the UK’s ongoing economic struggles. The highlights for the period between July and September 2022 show an employment rate of 75.5 percent, largely unchanged compared with the previous quarter. The UK unemployment rate was estimated at 3.6 percent, which is 0.2 percent lower than the previous quarter.
“The UK economy is certainly facing a challenging period with soaring inflation and the Bank of England warning that the UK could be set for its longest recession since records began. The Chancellor, Jeremy Hunt, is due to deliver his Autumn Statement on Thursday 17 November and has already warned that tax rises are necessary to help tackle inflation. Against this backdrop, it is likely that the labour market will face a relatively turbulent time. Despite the ongoing resilience of the market during the pandemic, it is likely that the economic difficulties will lead to more job losses over the coming months.
“The labour market has been particularly active over recent months with the so-called “Great Resignation”, however, we may see a decline in the number of people moving jobs in the face of such economic uncertainty.”
On the ONS Labour Market report, ManpowerGroup Operations Director, Gareth Vale, said:
“Our greatest area for concern remains the overall talent shortage. While employers are doing all they can to retain existing talent and upskill their teams, care must be taken not to alienate loyal members of staff in the process. We’re seeing for example a trend in raising notice periods from one month to three months for many full-time employees. This is often not being matched on the employer-side of the contract as businesses attempt to retain talent but also prepare for the possibility of having to quickly downsize.
“The good news is that unemployment is still at a relatively low rate and while there has been a slight rise (to 3.6%) in the three months to September – a trend we expect to continue into 2023 as economic conditions remain challenging – there are still around 1.2 million unfilled vacancies and thousands of temporary seasonal roles in areas such as retail and logistics. And temporary roles are likely to feature further in 2023 as employers turn increasingly to these in the face of wider economic uncertainty.
“With average total pay including bonuses up by 6 percent but not keeping pace with inflation, some people are looking to work more hours or take on an additional role to supplement incomes to keep pace with rising costs. Employers will need to keep an eye on this in terms of staff wellbeing and the impact it could have on overall productivity and growth. The rising cost of living does appear to be bringing more older people back into the workforce but not currently at a fast enough rate to offset the rise of inactivity caused by those leaving the workforce and not being replaced, whether that’s because of long-term sickness or other reasons.”
Neil Carberry, Chief Executive of the Recruitment Employment Confederation said:
“This morning’s ONS statistics suggest that the exceptional growth in demand for new workers we’ve seen through the year is at an end. But hiring activity is still at a very high level and shortages are still a key problem for firms. Pressure to raise pay for existing staff, as shown in today’s data, and caution about the economic outlook, are likely to be contributing factors in hirers becoming a little more cautious.
“Despite increased levels of employer caution, vacancies are still at historically high levels – it is still a good time to be looking for work. Unemployment remains at record lows, while employment is still below February 2020 levels. That means economic inactivity – those out of work and not looking for it – is a growing challenge, with the ONS figures showing it has hit a new high.
“From healthcare to childcare to flexible working, businesses and Governments need to be working together to boost labour supply so people can earn more in the midst of high inflation and create the capacity for the economy to grow. Growth is the only way we can fund public services and keep taxation low over the long term, and we’ll be looking for a clear plan from the Chancellor at the Autumn Statement on Thursday.”
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.
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