In the latest release of the Office for National Statistics (ONS) November Labour Market Report, the United Kingdom grapples with a complex employment landscape, marked by declining job vacancies and a notable shift in pay growth patterns.
During the period of August to October 2023, the estimated number of job vacancies in the UK experienced a significant decline, falling by 58,000 on the quarter to 957,000. This marks the 16th consecutive quarter of decreasing vacancies, with declines observed across 16 out of the 18 industry sectors.
In terms of pay growth, the report reveals that annual growth in regular pay (excluding bonuses) in Great Britain stood at 7.7% in July to September 2023. While slightly down from previous periods, this rate remains among the highest recorded since comparable records began in 2001. The annual growth in employees’ average total pay (including bonuses) was 7.9%, influenced by one-off payments made in the Civil Service during July and August 2023. In real terms, adjusted for inflation using the Consumer Prices Index including owner occupier’s housing costs (CPIH), annual growth for total pay rose by 1.4%, and regular pay increased by 1.3%.
Labour disputes played a role in the dynamics of the UK labour market, with 229,000 working days lost in September 2023 due to strikes, primarily concentrated in the health and social work, as well as the education sectors.
A notable revision in payrolled employee growth emerged in the report, with the September 2023 figures adjusted from a previously reported decrease of 11,000 to an increase of 32,000 compared to August 2023. The estimate of payrolled employees in the UK for October 2023 increased by 33,000 from the revised September 2023 figure, reaching 30.2 million. However, this October estimate is provisional and subject to revision with the influx of more data in the coming months.
The report also introduces an alternative series of estimates to address increased uncertainty around the Labour Force Survey (LFS) figures. Derived from growth rates in Pay as You Earn Real-Time Information and the Claimant Count, these alternative estimates for July to September 2023 reveal a 0.1% decrease in the UK employment rate to 75.7%, a largely unchanged unemployment rate at 4.2%, and a steady economic inactivity rate at 20.9%.
As the UK navigates these intricate labour market challenges, policymakers and analysts will closely monitor future data releases for a comprehensive understanding of the evolving economic landscape.
“As cost-of-living pressures combine with significant talent gaps, wage growth at 7.7% in the quarter to September 2023 remains high and continues to be a keen area of focus for employers and candidates alike. Our advice to organisations who are facing this perfect storm of high inflation, skills shortages and economic stagnation, is to think carefully before making pay increases. While uncertainty remains so prevalent, our recommendation is to look instead at ways to retain existing staff by bolstering benefits packages and by offering opportunities to upskill and reskill, especially across the areas where talent shortages prevail.
While uncertainty remains so prevalent, our recommendation is to look instead at ways to retain existing staff by bolstering benefits packages
“Businesses must be prepared to make braver long-term decisions in areas such as their values and overall purpose. There is an opportunity to be seized by those who are prepared to adapt and do things differently – both in terms of employee retention and customer and client loyalty.”
“Recessionary headwinds may be getting stronger, but if we can address underlying economic fundamentals like talent and skills shortages in new ways and foster a stronger culture of innovation, investment and productivity, the UK’s future will be all the stronger for it.”