Tag: unemployment

Inflation is at a 40-year high at 9.1%

The latest data from the Office for National Statistics (ONS) has revealed that the UK’s unemployment and economic inactivity rates have decreased from March to May 2022 and is exacerbating the already critical talent shortages. In response, AMS (formerly Alexander Mann Solutions) has urged businesses to place more emphasis on internal hiring strategies.

The ONS data also revealed that, when adjusted for inflation, total pay fell by 0.9% and regular pay fell by 2.8% in the three months to May, which is certainly cause for concern given that CPI inflation hit a 40-year record of 9.1% in May and is expected to reach as high as 11% later this year.

Steve Leach, Managing Director, UK & Ireland, at AMS commented: “With unemployment and economic inactivity rates on the decline, it’s inevitable that the skills gap will continue to widen. Rather concerningly, the ONS statistics also reveal that wages are dropping when adjusted for inflation. With firms seemingly no longer using financial incentives to attract and retain talent, greater reliance on other skills strategies will be needed.”

“In my opinion, a lot of firms are overlooking a significantly valuable source of skills: their current talent. Identifying where internal mobility opportunities lie provides an opportunity for individuals to progress their career and move into higher salary brackets, which will not only help with filling the skills gap but also aid staff retention rates, particularly during the cost-of-living crisis.”

“As many talent acquisition leaders know all too well, there is no quick fix for the UK’s skills shortage, but opening positions up internally as well as implementing upskilling or reskilling programmes for current staff will really benefit businesses as well as the economy as a whole. A lack of career opportunity is regularly cited as the reason that people leave their current employer so ensuring companies are looking at their internal employee population will have a swift impact on skills deficits.”

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Unemployment rate hits record low

According to Statistics Canada, employment in Canada fell by 43,200 jobs in June from the previous month, the first decline since January and fully offsetting the increase of 39,800 recorded in May. This marks the first employment decline not associated with a tightening of public health restrictions since the beginning of the pandemic.

The agency indicated the employment loss in June from May was almost entirely due to a decrease of 51,000 jobs among workers aged 55 and older; there was little change in total job numbers among youth aged 15 to 24 and the core-age population aged 25 to 54.

The numbers came as a surprise to economists, who had been expecting the economy to add about 20,000 jobs during the month, CBC reported.

Positively however, Canada’s unemployment rate fell 0.2 percentage points in June to a new record low of 4.9% — the lowest rate since comparable data became available in 1976 — as fewer people looked for work. Total employment in Canada was 19.6 million in June.

June’s employment decline was driven by losses in part-time jobs, which fell by 39,100. Full-time employment fell by 4,000. Self-employment declined, while the number of employees in both the public and the private sectors held steady.

Jobs fell by 76,000 in the services-producing sector with losses spread across several industries, including retail trade. However, the goods-producing sector saw an increase of 33,000 jobs in June, with gains in construction and manufacturing.

Average hourly wages for employees increased 5.2%, or C$1.54, on a year-over-year basis in June to $31.24, compared with a year-over-year increase of 3.9%, C$1.18, in May.

By province, employment decreased in Newfoundland and Labrador and Quebec, while there were gains in Prince Edward Island and Manitoba.

Looking at just Ontario, the number of jobs fell by 24,700 to a total of more than 7.7 million. The province gained 27,900 full-time jobs but lost 52,500 part-time jobs. Ontario’s unemployment rate fell to 5.1% in June from 5.5% in May.

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50% of businesses are losing customers due to staff shortages 

New research by WorkJam has revealed that almost 50% of the business leaders surveyed have been understaffed for 5-6 months, while 36% have been understaffed for 3-4 months, and 78% are currently understaffed. A further 48% have lost customers because of staff shortages.

The survey of CxOs, Directors, and VPs in industries including retail, manufacturing, consumer goods, transporting, and warehousing found that for 30% of businesses, the shortages have amounted to between 16 and 20% of their workforce in the last 12 months. An additional 26% lost 11-15% of their staff during the same period.

There is little doubt that these results seriously impact day-to-day performance while putting additional strain on the employees left behind.

The survey also found that for 64% of businesses, churn levels have stayed the same (33%) or are somewhat higher (31%) than in the previous 12 months, with little chance of imminent improvement. In addition, more than half (53%) of those surveyed did not expect changes to hiring issues over the next 12 months. Fifty percent also expected retention issues to remain the same.

Reasons for employee churn included

  • Employees feel that their hours are too long or there wasn’t enough flexibility in their position (25%)
  • Diversity and inclusion issues (16%)
  • Dissatisfaction with salary (14%)
  • Dissatisfaction with benefits (10%)

Fifty-one percent of the survey respondents want to solve retention and hiring issues by providing better employee perks or benefits. A further 30% are investing in HR or frontline technology, and 27% are investing in learning and development.

Mark Williams, Managing Director EMEA of WorkJam, commented: “We’re in the midst of a global recruitment crisis. While it’s no secret that key sectors have been struggling to find and retain talent since the start of the pandemic – if not before – the figures revealed by our survey really put the problem into context. And the difficulty is that the issue is self-sustaining. Churn puts additional pressure on existing employees, increasing the likelihood that they, in turn, will seek employment elsewhere, again heaping pressure on those left behind.”

“Executives are faced with finding solutions that will aid retention and recruitment without necessitating a price hike in the middle of the cost-of-living crisis. According to our research, a quarter of businesses have already had to raise their prices. But this carries the risk of further deterring customers. It’s a difficult balance to strike.”

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Temporary billings rise more than permanent placements

The latest KPMG and REC, UK Report on Jobs survey has found that permanent staff appointments and temp billings have grown at the lowest rate in 16 months in June. While recruitment activity continues to expand across the UK, temporary billings have risen more than permanent placements.

According to the report compiled by S&P Global, recruiters shared that candidate shortages were limiting hiring activity. In addition, with ever-increasing economic uncertainty, low growth was attributed to slower client decision-making. The report also found that overall demand for workers had increased at the slowest rate since March 2021.

Further findings include that the rate of decline for staff availability has been the quickest for three months. Efforts to attract and secure candidates have resulted in marked increases in starting pay; however, salary and wage inflation rates have lessened since May.

Recruitment consultancies attributed lower candidate numbers to:

  • a generally low unemployment rate;
  • fewer foreign workers;
  • robust demand for staff; and
  • hesitancy to switch roles in the increasingly uncertain economic climate.

While overall vacancies continue to increase dramatically, the latest upturn was also the lowest in 15 months. The results also showed lower demand for both permanent and temporary workers at the end of Q2; however, the quicker expansion rate was in demand for permanent workers.

Staff availability declined severely in June, with the deterioration going up to the sharpest for three months with both permanent and temporary labour supply dropping quickly.

Imbalances between the supply and demand for workers also resulted in steep increases in starting pay rates during June. However, as sharp and well above the series average as the starting salary rates are, the rates were the softest since August 2021. Furthermore, temp wage growth dropped to a 12-month low.

Regionally, softer rises in permanent placements were noted in all four monitored English regions. However, North of England saw the weakest increase overall.

London saw the sharpest increase in temp billings at the end of Q2, whereas the softest expansion was noted in the Midlands.

In terms of vacancies, the strongest increase was for permanent workers in the private sector, followed by permanent staff in the public sector. However, the former saw a notable drop in growth in June compared to May. The softest rise, although still marked, was in vacancies for temporary workers in the public sector.

When looking at the results by industry, the data signalled steep increases in permanent staff demand across all ten monitored employment categories. Hotel & Catering showed the sharpest upturn in vacancies overall, with IT & Computing and Nursing/Medical/Care following.

Higher temp vacancies were seen in nine of the ten monitored job categories at the end of the Q2, with Hotel & Catering at the top of the rankings. Retail was the only sector to show a drop in demand, even though the rate of contraction was modest.

Neil Carberry, Chief Executive of the REC, commented: “The labour market is still strong, with demand for new staff high. That said, today’s data show that we will likely be past the peak of the post-pandemic hiring spree. That pace of growth was always going to be temporary – the big question now is the effect that inflation has on pay and consumer demand over the course of the rest of the year. Whether we will see the market settle at close to normal levels, or see a slowdown, is unpredictable at this point.

“Part of the reason for unpredictability in the market is a slower economy accompanied by severe labour and skills shortages. These are already proving a constraint on growth in many firms. The government should be thinking about how to ensure all its departments enable greater labour market participation and encourage business investment funds to help address this.

“It is important to note that plenty of hiring is happening in this tight market – there are candidates out there for firms who get it right. Skilled recruitment professionals are at the heart of this, making a difference to opportunity and growth for companies and workers.”

Claire Warnes, Head of Education, Skills and Productivity at KPMG UK, said: “The apparent buoyancy of the jobs market overall continues to mask some increasingly concerning trends. Firstly, the fluctuations in demand for permanent and temporary workers in some sectors may be showing a sustained downward trend, as it becomes clear that current economic pressures are impacting employers’ confidence to grow. Secondly, the supply of candidates in all sectors continues to decline, with the rate of contraction accelerating to the quickest for three months in June. Added to that, competition for candidates pervades all sectors with employers offering financial incentives to retain talent, so increasing wage inflation. This latest data could be signalling that the UK jobs market may be more fragile than it seems.”

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Economic activity decreases again

According to the latest Labour Force Survey (LFS) from the ONS, its estimated that for the period of January to March 2022 there was a decrease in the unemployment rate, while the employment and inactivity rates increased.

Even though the market is contracting, the employment rate increased by 0.1 percentage points on the quarter to 75.7%, however this is still below pre-pandemic levels. According to figures, the increase in the employment rate was driven by the movement of people aged 16 to 64 years from unemployment to employment. However, there was also a record-high movement of people from economic inactivity into employment with total job-to-job moves also increasing to a record high of 994,000, driven by resignations rather than dismissals, during the January to March 2022 period – the Great Resignation continues…

The estimated number of payrolled employees for April 2022 shows a monthly increase, up 121,000 on the revised March 2022, to a record 29.5 million.

The unemployment rate for January to March 2022 decreased by 0.3 percentage points on the quarter to 3.7% and for the first time since records began, there are fewer unemployed people than job vacancies.

Tania Bowers, Global Public Policy Director at APSCo commented on the skills shortages: “The skills shortages in the UK are reaching concerning levels and this latest data shows the scale of the pressure on employers and the staffing sector as demand continues to outstrip supply. We’ve seen some encouraging signs from the Government, including the highly skilled immigration visa which was announced by the Chancellor earlier this year.

“However, we are concerned that the absence of the Employment Bill in the Queen’s Speech is an indication that the immediate skills crisis has slipped off the priority list for the Government. At a time when the job market is growing at unprecedented rates and competition is rife, more appropriate regulation is needed for the modern labour market.”

Economic activity 

The economic inactivity rate increased by 0.1 percentage points to 21.4% in January to March 2022 and this recent inactivity is believed to be driven by those aged 50 to 64 years.

The number of job vacancies in February to April 2022 rose to a new record of 1,295,000. However, the rate of growth in vacancies continued to slow down.

Kate Meadowcroft, Employment Partner at legal business, DWF, commented on the UK Labour Market figures regarding increased pay: “Undoubtedly the cost-of-living crisis and soaring inflation will have a knock on effect on the labour market.  ONS figures have previously shown that although wages have risen, once you consider inflation pay is actually falling. Employees will be seeking out the most attractive rewards packages in order to combat the financial repercussions of the turbulent economy.

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Prison leavers receive mentoring to create and market clothing range

A new project, established by social enterprise Inside Out, has been launched to rehabilitate young ex-offenders by helping them create and market a clothing brand. The hand-produced clothing range is currently being sold in a pop-up store in London.

New data from Cebr, commissioned by LinkedIn, estimates that only 2 in 10 prison leavers can find work in the first year after their release. According to the data based on prison leavers in 2020, the unemployment rate for ex-offenders is 89% six weeks after their release and only improves to 44% a year after their release.

The initiative, supported by LinkedIn, provided training and mentoring to a group of ex-offenders. The prison leavers were aged between 18 and 27 years and struggling to find work, and the project was designed to build skills to help them find permanent employment.

The programme taught the young people technical skills, such as screen printing and design, business skills, like sales and marketing, as well as soft skills – including teamwork and problem-solving. Additionally, they were assisted in building professional profiles on LinkedIn and taught best practices on networking and applying for roles.

The clothing range is a collection of branded hoodies, hats, T-shirts, facemasks, and bags and is available for purchase at ‘Blank Canvas’, a pop-up store in Westfield Stratford, London, between the 19th and 28th April.

Tashan Lane-Pierre, Project Ambassador, Inside Out Project, said: “I started my own clothing line in 2017 before I went to prison. Now that I’m out, I want to learn the business of fashion, how it’s produced behind the scenes in the hope that I’ll be able to run my own label one day. The skills I’m learning through this project will help me in business and I’m excited to be a part of it. I just want the opportunity to be treated normally and not judged for my past actions.” 

Janine Chamberlin, UK Country Manager at LinkedIn, said: “This group is full of ideas and it’s been amazing to see their drive to go on and make a positive impact in the world. Ex-offenders have a lot to offer potential employers and I really hope the skills they’ve learned and the networks they are building through this programme will help them find a fresh start and a new role.”

Inside Out Project Founder Greg McKenzie, said: “Unemployment rates for former prisoners are much higher than among the wider population, even ten years after release. But there is a positive correlation between employment and reduced reoffending, which shows the need for proactive policies to ensure more prison leavers are able to access job opportunities and the tools and training they need to succeed. This is what Inside Out is all about.”

The hope is that projects such as Inside Out will help prison-leavers with their unemployment challenges and reduce reoffending.

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ONS stats show increase in economic inactivity

The latest figures from the ONS have been released and what stands out is that even though average pay rises for the first quarter are at an average of 4% (excluding bonuses), this appears well below inflation. However, in real terms (adjusted for inflation), growth in total pay was 0.4% and regular pay fell on the year at negative 1.0%. Strong bonus payments over the past six months have kept recent real total pay growth positive but employers may find it even harder to retain talent through salary increases alone as the cost-of-living crisis continues in the UK.

The latest Labour Force Survey (LFS) showed that for December 2021 to February 2022 the employment rate remains unchanged on the quarter, while the unemployment rate decreased. Over the same period, the economic inactivity rate has increased slightly which signals a slight dip in the economic rebound following the end of the pandemic with inactivity increasing by 0.2 percentage points to 21.4% from December to February 2022.

There was a noteworthy increase, albeit small, in the number of payrolled employees for March 2022 which is up 35,000 on the revised February 2022 to a record 29.6 million.

The report showed that once again, the number of job vacancies in January to March 2022 rose to a new record of 1,288,000, with the rate of growth in vacancies continuing to slow down.

Jon Keeble, employment partner at DWF commented on the latest report: “The latest ONS labour market figures demonstrate continued resilience in the labour market. The highlights for the period between December 2021 and February 2022 show a largely unchanged employment rate of 75.5%.

“With legal requirements largely removed across the UK and a shift over to personal responsibility we are very much in the phase of having to live with COVID-19. Although employers are now faced with a number of practical challenges as we enter this next chapter, the relaxation of restrictions should have a positive effect on the labour market.

“We are yet to see what impact the cost-of-living crisis will have on the labour market and whether the Chancellor’s Spring Statement and the rise in the National Minimum Wage will provide sufficient support.  Undoubtedly, employees who are struggling to cope financially will be seeking out those employers, which are able to provide the most attractive rewards package.”

James Reed, Chairman of Reed.co.uk, also commented: “The economy is facing a crunch point as businesses contend with serious challenges, from rapidly rising inflation to severe labour shortages. The jobs boom that began last year continues to be reflected in the ONS’s labour market statistics. With job postings on Reed.co.uk in March increasing 18% year-on-year and 14% month-on-month, this trend shows little sign of slowing. But with economic growth now as low as 0.1% and unemployment at historic lows, the jobs boom is in danger of becoming a jobs overload.”

“The difficulties businesses now face in hiring staff, are having a knock-on effect on supply chains, production output and the quality of goods and services. This is slowing the UK’s economic recovery from the pandemic.

“There are now 8.8 million people who are economically inactive in the UK, which is 600,000 more than at the start of the pandemic. This is a symptom of what I call ‘The Great Lie Down’, with many workers leaving the workforce altogether, some through long term sickness and others preferring early retirement or different lifestyle choices. If these workers are to be coaxed back, they will need convincing with attractive employment arrangements, higher wages and better conditions and benefits.

“Currently, less than 20% of these people who are economically inactive say they would like a regular, paid job. However, if it was possible to help this group find work then that would be of great benefit to both them and the economy.”

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Number of self-employed workers remains low  

The latest Labour Force Survey (LFS) has been released and contains estimates for November 2021 to January 2022. The survey has shown a continued recovery in the labour market. The employment rate has increased on the quarter with a decrease in the unemployment rate. However, economic inactivity has increased slightly on the quarter.  

The UK employment rate increased by 0.1 percentage points on the quarter to 75.6%. Full-time employees drove the increase in the employment rate during the latest three-month period. While the number of part-time employees decreased strongly during the pandemic, there’s been a steady increase in these figures since April to June 2021.  

 

Self-employed data raises concerns around the UK’s skills stability 

The number of self-employed workers remains low following decreases through the coronavirus pandemic. 

Tania Bowers, Global Public Policy Director at the Association of Professional Staffing Companies (APSCo), raised concerns around the UK’s level of self-employed professionals and made comment: “The continued increase in vacancies being reported by the ONS is a trend we expect to see continue for some time yet and has arguably become the ‘norm’ for the staffing sector over the last year. However, the fact that the data does also show that the number of self-employed workers remains low following decreases during the pandemic is a real concern given the tight labour market we’re experiencing. With highly skilled resources scarce, the UK’s economic recovery rests on the ability to tap into flexible resources. However, since the roll out of Off-Payroll, Brexit and following significant challenges during the pandemic, the self-employed have increasingly been driven to alternative employment routes.” 

The ONS stated that its most timely estimate of payrolled employees has shown another monthly increase (up 275,000) in February 2022 to a record 29.7 million. 

The unemployment rate decreased by 0.2 percentage points on the quarter to 3.9%, while it’s reported that economic inactivity rate increased by 0.1 percentage points to 21.3%.  

During the pandemic, increases in economic inactivity compared with the previous three-month period were largely driven by those aged 16 to 24 years. However, interestingly the LFS has shown that the number of economically inactive people aged 16 to 24 years has been decreasing since early 2021, with those aged 50 to 64 years driving the recent increases in economic inactivity.   

According to the survey, the number of job vacancies in December 2021 to February 2022 rose to a new record of 1,318,000. This is an increase of 105,000 from last quarter, with half of the industry sectors showing record highs. However, the rate of growth in vacancies has continued to slow down. 

Average total pay increase (including bonuses) was 4.8% and growth in regular pay (excluding bonuses) was 3.8% among employees in November 2021 to January 2022, according to the ONS. In real terms, with figures adjusted for inflation, growth in total pay was 0.1% and regular pay fell on the year at negative 1.0%; strong bonus payments over the past 6 months have kept recent real total pay growth positive. Previous months’ strong growth rates were affected upwards by base and compositional effects. These initial temporary factors have worked their way out. However, ONS is now comparing the latest period with a period where certain sectors had increasing numbers of employees on furlough because of the winter 2020 to 2021 lockdown, so a small amount of base effect will be present for these sectors. This will not be to the degree we saw when comparing periods at the start of the coronavirus pandemic. 

 

Challenging period ahead 

Neil Carberry, Chief Executive of the Recruitment & Employment Confederation made comment: “Businesses across the country are doing what they can on pay, both for existing staff and to help them hire in a jobs market experiencing a severe labour shortage. But rising inflation both makes that effort hard, and reduces the gains workers feel from pay rises. In real terms, average pay has fallen compared to last year. Now is not the right time to be increasing taxes on work for both companies and workers. Ahead of the spring statement, we’re urging the Chancellor to delay the upcoming rise in National Insurance – the UK’s biggest business tax, as well as an additional income tax for workers. 

“A key way to reduce the pressure on our economy and keep inflation down will be to focus on ensuring employment rates and hours worked recover to pre-pandemic levels. Inactivity is still rising, so firms and government need to work together to address this. Recruiters have a key role to play here, from helping government with activation schemes to supporting employers with new forms of job offer to tempt people back into work.” 

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According to the US Bureau of Labor Statistics, the unemployment rate moved down to 3.8%, which was far ahead of expectations, as the US economy continues to rebound.  

The BBC reported that job growth across the US was widespread and led by gains in leisure and hospitality, professional and business services, health care and construction with the number of new jobs added well above analysts’ estimates of around 400,000 new roles. 

Companies also added more jobs in January than previously estimated, according to revised numbers released on Friday with average hourly earnings rising by 5.1% over the past 12 months, although that figure is down from a 5.7% annual increase in January. 

According to reports, most of the rise in jobs came from the leisure and hospitality industries, which added 179,000 new roles, and at bar and restaurant companies, which filled 124,000 jobs.  

Employment in professional and business services rose by 95,000 jobs in February. 

However, the total number of jobs on US payrolls is still 2.1 million below where it was before the pandemic. 

Analysts predicted that the stronger-than-expected jobs market increased the certainty that the US central bank will raise interest rates at its next meeting which is something US Federal Reserve chairman Jerome Powell was in favor of as quoted saying earlier this week.  

Neil Birrell, Chief Investment Officer at Premier Miton Investors made comment “It looks like rates up by 0.25 basis points will be coming this month, as noted by Powell yesterday. The outlook is too uncertain for more than that.”  

Seema Shah, Chief Strategist at Principal Global Investors, said an interest rate rise in the US was “all but baked in” to help control soaring inflation rates. 

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Growth in total pay increased by 4.3% 

According to the latest Labour Force Survey (LFS) published by the ONS, economic inactivity has increased by 0.1 percentage points to 21.2%.  

The increase in economic inactivity since the start of the pandemic was largely driven by those who are economically inactive because they are students or for “other” reasons, revealed the survey. In the latest three-month period however, those who are inactive because they are students continued to decrease, while the increase was driven by those who are inactive because of long-term sickness and “other” reasons. 

The UK employment rate, however increased by 0.1 percentage points on the quarter to 75.5%, while the number of self-employed workers remained low following similar decreases seen during the pandemic. The number of employees increased to another record high and job-to-job moves also reached record numbers in October to December 2021, driven by resignations.   

Decrease in unemployment  

The survey revealed that the number of payrolled employees also increased monthly in January to a record of 29.5 million while unemployment decreased by 0.2 percentage points to 4.1%.  

Growth in average total pay (including bonuses) was 4.3% and growth in regular pay (excluding bonuses) was 3.7% among employees in October to December 2021. In real terms (adjusted for inflation), total and regular pay fell on the year at negative 0.1% for total pay and negative 0.8% for regular pay. Previous months’ strong growth rates were affected upwards by base and compositional effects. These temporary factors have largely worked their way out of the latest growth rates, however, a small amount of base effect for certain sectors may still be present. 

Kirstie Donnelly MBE, CEO of City & Guilds commented: “With just 4.1% of the population unemployed, we are now nearly back to pre-pandemic levels of unemployment, but we’re by no means back to normality. The labour pool has shrunk dramatically thanks to the double impact of Brexit and the pandemic on our non-indigenous workforce. And the number of open job vacancies continues to increase as businesses struggle to recruit the skilled talent they need – now standing at a record 1,298,400, according to the ONS.”  

Paul Modley, Director of Diversity, Equity & Inclusion at AMS also made comment: “We are seeing more and more talent acquisition leaders encouraging hiring managers to rethink their qualification requirements which can often inadvertently limit the intake pool. While there is often a temptation to use language such as ‘demonstrate superior skills’ in a job description, by making small changes to use inclusive wording such as ‘demonstrate competence in…’, employers are far less likely to put off some candidates from applying. By challenging the language used in job specifications, businesses can make an immediate impact on their ability to tap into a wider talent pool at the very beginning of the recruitment process.” 

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