Flexible labour market limiting impact of sluggish economy

Supply of staff remains a challenge and threat to business growth.

Today’s labour market statistics published by the Office for National Statistics (ONS) show the number of vacancies at 853,000 for October to December 2018, 10,000 more than for July to September 2018, 39,000 more than for a year earlier and the joint-highest estimate since comparable records began in 2001.

The unemployment rate was estimated at 4.0%, the lowest since December 1974 to February 1975. There were an estimated 1.37 million unemployed people, little changed compared with June to August 2018 but 68,000 fewer than for a year earlier.

The employment rate was at 75.8%, higher than for a year earlier (75.3%) and the highest since comparable estimates began in 1971. There were an estimated 32.53 million people in work, 141,000 more than for June to August 2018 and 328,000 more than for a year earlier.

Average weekly earnings for employees in Great Britain in real terms (that is, adjusted for price inflation) increased by 1.1% excluding bonuses, and by 1.2% including bonuses, compared with a year earlier.

PwC has also released today (22 Jan) its CEO Survey, indicating that 61% of UK CEOs expect to increase headcount in 2019, compared with a global average of 53%.

Kay Cooper, Managing Director of RPO for EMEA at Korn Ferry, offered her thoughts on why UK business leaders are so keen to expand their workforce and how they can go about it in a tight job market:

“It’s very revealing that despite the wider economic context, UK businesses are still keen to tap into talent and expand the workforce. This finding underlines that businesses are operating in a dynamic environment, where digital disruption is shaking up entire markets, and they therefore are always hungry for new skillsets and expertise to help them navigate this shifting road.

“Yet with employment in the UK at a record high, organisations who want to boost headcount will find themselves in a competitive job market. Business leaders need to think carefully about how they can attract and retain the best talent. From flexible working schemes for a better work-life balance and increased holiday allowance, to robust career development programmes and creative working environments, employers need to offer something more. While some believe monetary rewards are the key factor, creating meaningful work can be just as important. After all, most people go to the office on a Monday morning wanting to do work that will make a difference, as well as be useful and contribute to society.”

Commenting on today’s employment and wages figures

ONS Head of Labour Market David Freeman said:

“The number of people working grew again, with the share of the population in work now the highest on record. Meanwhile, the share of the workforce looking for work and unable to find it remains at its lowest for over 40 years, helped by a record number of job vacancies

“Wage growth continues to outpace inflation, which fell back slightly in the latest month.”

Recruitment & Employment Confederation (REC) director of policy, Tom Hadley said:

“Despite the ongoing political turbulence, employers are continuing to hire. Today’s data shows a joint-record number of vacancies, underlining the fact that the supply of staff remains a major challenge and a threat to business growth.

“Reassuring people from the EU working across a range of sectors in the UK must remain a priority, with yesterday’s announcement by the Prime Minister to scrap EU citizens’ settled status fee sending out a much needed positive message.

“However the politics play out over the coming weeks and months, employers will need to continue innovating in how they hire and attract staff to fill vacancies. Recruitment professionals will play a pivotal role in finding new ways of meeting workforce challenges in high-demand sectors, ranging from engineering and healthcare to hospitality, construction and logistics.”

Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said: 

“The marked increase in employment is further evidence that the jobs market remains a major positive for the UK economy. Although some firms report that Brexit uncertainty and recruitment difficulties are weighing on hiring intentions, the high degree of flexibility of the labour market continues to limit the impact of a sluggish economy on UK jobs growth.

“With earnings growth rising once again, pay growth is now comfortably outpacing inflation. However, achieving meaningful real wage increases over a sustained period is likely to prove challenging without delivering a marked improvement in productivity and easing the high upfront business costs which stifle pay increases.

“The continued rise in the number of vacancies is further evidence of the growing struggle for firms to hire the staff they need, which is weakening the UK’s growth and productive potential. Against this backdrop, more must be done to protect the long-term health of the UK labour market, including delivering a future immigration system that helps, rather than hinders businesses ability to invest, grow and support the economy. The Prime Minister’s announcement that there will no longer be a cost for EU nationals to apply to the Settled Status Scheme is a welcome move for the many businesses that are concerned about losing European employees after Brexit.”

Commenting on the latest @ONS figures, @Suren_Thiru says the flexibility of the labour market continues to limit the impact of a sluggish economy on UK jobs growth https://t.co/F9LtkjCy5r pic.twitter.com/0xqNFHvsIL

— BCC (@britishchambers) January 22, 2019