Labour market remains strong despite economy slow down

Responding to today’s ONS figures, Jonathan Boys, labour market economist for the CIPD, the professional body for HR and people development, comments:

Strong demand in labour market continues despite slow down

“There is evidence of slowing momentum in the labour market with the first quarterly decrease in vacancy numbers since mid-2020. However, the labour market remains incredibly tight with strong labour demand and candidates in short supply. The immediate problem for businesses is labour shortages. For now, there remains strong demand for their goods and services and staff are needed to deliver these. The redundancy rate remains near record lows showing that businesses are focusing as much on retention as they are recruitment to meet staffing needs.

Pay decreasing in relative terms

Regular pay growth was 4.7% in the year to April-June 2022. This is relatively high by recent standards but falls well short of the rise in prices. Inflation currently stands at 9.4% in the 12 months to June 2022 and is expected to peak at 13% later this year. Regular pay therefore fell by 3% – the biggest fall ever recorded in the time series going back to 2001. The yawning chasm between pay growth and inflation will continue to erode pay packets making people poorer.

Employers can offer fringe benefits to offset household costs

Employers have an important role to play in alleviating the cost of living crisis for their staff. CIPD research suggests that better use of existing benefits can make people better off. Certain fringe benefits can offset household costs like housing, travel, and childcare. CIPD research also finds employees working in a company with a financial wellbeing policy are more likely to feel in control of their finances. However, just 18% of organisations currently have a financial wellbeing policy.”

To find out more about other benefits you can offer to attract and keep your employees speak to us. Our insights into what other employers are offering to make their overall benefits package more attractive to prospective employees will help you stay competitive.

*Update from CIPD