The latest ONS labour market figures have shown a cooling labour market as organisations grapple with rising employment costs and more.
The ONS published its latest labour market figures this morning. “The labour market remains challenging, with many businesses maintaining a cautious approach to hiring,” observes Kate Shoesmith, The Recruitment and Employment Confederation (REC) Deputy Chief Executive. “But if we are to harness the optimism businesses tell us they have for future recruitment later this year, we will need the Autumn Budget to offer employers a bit more bandwidth on costs.”
Shoesmith suggests the statistics have shown the resilience of the UK labour market with the number of people in work slightly up and unemployment only slightly higher than in the previous quarter. “Tackling economic inactivity, which saw a fall over both the quarter and the year, remains the single greatest challenge for this government if they are to ever achieve their goal of 80 per cent employment,” she says.
Overall the REC’s assessment shows a mixed labour market picture. Construction and blue-collar industries are showing a gentle return to hiring – often a strong indicator for the wider economy – alongside sustained demand for engineering skills. However, hospitality and retail saw a slow start to the summer amid cost headwinds.
“With pay growth steadying overall after a volatile few years – prompted in part by inflating-busting rises in national minimum wage rates – now is the time for pragmatism from the Low Pay Commission before they make any further decisions on pay rates, and as the Bank of England continues to monitor interest rates closely. Business cannot afford further cost rises,” states Shoesmith.
James Cockett, senior labour market economist for the CIPD identified youth employment as a particular challenge in the current scenario: “As employment costs increase, it’s critical that employers aren’t dissuaded from hiring young people,” he said. “Industries like hospitality and retail provide meaningful job opportunities for young people at the beginning of their working lives. The government needs to go further than the youth guarantee and introduce an apprenticeship guarantee for all 16 to 24-year-olds, to provide valuable opportunities for young people to both learn and earn. Better training and employment opportunities will ensure they start their working lives on the right foot while helping employers build future talent pipelines.”
