UK narrowly avoids recession again
According to the ONS latest labour market report, the UK employment rate was estimated at 75.6% in October to December 2022. That equates to increase in employment of 0.2%. The increase in employment over the latest three-month period is said to have been driven by part-time workers.
The report has revealed that the number of payrolled employees for January 2023 has also increased. It’s up 102,000 on the revised December 2022 figures, to 30 million.
The unemployment rate for October to December 2022 has however, increased by 0.1% on the quarter, to 3.7%. This figure is driven by people aged 16 to 24 years. Those unemployed for over six, and up to 12, months also increased, while those unemployed for over 12 months decreased in the recent period.
Talk of a recession has dominated the news but the latest figures show that the economic inactivity rate decreased by 0.3% on the quarter, to 21.4% in October to December 2022.
The ONS has stated that flows estimates between July to September 2022 and October to December 2022 show that there was a record-high net flow out of economic inactivity, driven by people moving from economic inactivity to employment. This is great news for the labour market as job posts, although decreasing online, remain at record highs.
In November 2022 to January 2023, the estimated number of vacancies fell by 76,000 on the quarter to 1,134,000, the seventh consecutive quarterly fall since May to July 2022. The fall in the number of vacancies reflects uncertainty across industries, as survey respondents continue to cite economic pressures as a factor in holding back on recruitment.
Growth in average total pay (including bonuses) was 5.9% and growth in regular pay (excluding bonuses) was 6.7% among employees in October to December 2022. For regular pay, this is the strongest growth rate seen outside of the coronavirus (COVID-19) pandemic period. Average regular pay growth for the private sector was 7.3% in October to December 2022, and 4.2% for the public sector; outside of the height of the coronavirus pandemic period, this is the largest growth rate seen for the private sector.
In real terms (adjusted for inflation), growth in total and regular pay fell on the year in October to December 2022, by 3.1% for total pay and by 2.5 for regular pay. This is smaller than the record fall in real total pay seen in February to April 2009 (4.5%), but remains among the largest falls in growth since comparable records began in 2001.
James Reed, Chairman, Reed.co.uk, commented: “The job market remains healthy despite talk of Britain only narrowly avoiding a recession. A key factor driving the boost in job applications that we are seeing is the cost-of-living crisis. People are recognising that one way in which they can secure a pay rise is to move jobs.
“Interestingly, while wage growth remains stable across the jobs market, it is blue-collar roles; jobs that cannot afford such flexibility with remote working, that are seeing the biggest growth in pay. This January, comparing year-on-year, it is customer service and engineering roles that have experienced the most significant pay hikes – up 9.8% and 7.8%, respectively.
“This trend suggests an ‘in-person premium’ when it comes to pay – with organisations having to boost salaries to attract people to roles that cannot provide the flexibility now associated with the white-collar market.”
Chris Gray, ManpowerGroup UK Director, said: “The UK labour market continues to be very tight and also very resilient. Employers are for now shrugging off the concerns of an economic slowdown but for those looking to hire it remains very tough. Job vacancy levels remain high at around 1.1 million although having reduced a little over the month which points to a slight cooling in demand.
“Pressures on household spending show little sign of easing up – regular pay has fallen by 2.5% when taking inflation into account returning a wage growth average of 6.7% and will be front of mind for both employers and workers alike.
“We’ve heard The Chancellor already outline plans to encourage more over 50s back into the workforce. Money and costs may be a motivator for some over 50s but social stigma also presents a challenge for many within this age group. We have to create the right working environment to overcome some of these issues with more flexibility offered and ensure that employers are listened to, and better accommodate, the needs of this demographic in the workplace. It’s a particularly complex area and there is no silver bullet, but employers and government must work closely together to find the best solutions.”