Strongest rate of growth in pay
Growth in regular pay rose by 6.7% but fell by 3.1% in real terms
The last quarter of 2022 saw the strongest rate of growth in regular pay seen outside of the coronavirus pandemic period due in part to continued labour shortages. Growth in average total pay (including bonuses) was 5.9% and growth in regular pay (excluding bonuses) was 6.7% among employees in October to December 2022. Average regular pay growth for the private sector was 7.3% in October to December 2022, and 4.2% for the public sector.
However, in real terms (adjusted for inflation), growth in total and regular pay fell on the year in October to December 2022, by 3.1% for total pay and by 2.5 for regular pay. This remains among the largest falls in growth since comparable records began in 2001.
Employment rate rose driven by part-time workers
The UK employment rate was estimated at 75.6% in October to December 2022, 0.2 percentage points higher than the previous three-month period. The increase in employment over the latest three-month period was driven by part-time workers.
The most timely estimate of payrolled employees for January 2023 shows another monthly increase, up 102,000 on the revised December 2022 figures, to 30.0 million.
The unemployment rate for October to December 2022 increased by 0.1 percentage points on the quarter, to 3.7%. In the latest three-month period, the number of people unemployed for up to six months increased, driven by people aged 16 to 24 years. Those unemployed for over six, and up to 12, months also increased, while those unemployed for over 12 months decreased in the recent period. However the labour market continues to suffer with labour shortages still being a crucial factor influencing the UK job market.
Economic activity decreases
The economic inactivity rate decreased by 0.3 percentage points on the quarter, to 21.4% in October to December 2022. The decrease in economic inactivity during the latest three-month period was driven by people aged 16 to 24 years. Looking at economic inactivity by reason, the quarterly decrease was driven by those inactive because they are students, retired, or long-term sick still adding to difficulties with labour shortages.
Flows estimates between July to September 2022 and October to December 2022 show that there was a record-high net flow out of economic inactivity, driven by people moving from economic inactivity to employment. This is good news for businesses who’ve been struggling to recruit people with the right skills as people return to work. In part this return may be driven by those who took early retirement, following the pandemic, who have now decided to return to work as inflation and fuel prices put a strain on their household budgets. If you’re returning to work after a brief career break and want some tips on returning to work check out our blog Advice for over 50s returning to the workplace.
Or if you want to speed up your success rate our 12 top tips to find a new job quickly offers some great advice.
Recruiters and business groups still warn that labour shortages are holding back economic growth. Only by working together can employers and government hope to draw more people, from a range of backgrounds, into the labour force.
Vacancies continue to fall
Whilst may initially appear to be good news for businesses who’ve been struggling to recruit, it does indicate that businesses are holding back on recruitment just now. In November 2022 to January 2023, the estimated number of vacancies fell by 76,000 on the quarter to 1,134,000, the seventh consecutive quarterly fall since May to July 2022. The fall in the number of vacancies reflects uncertainty across industries, as survey respondents continue to cite economic pressures as a factor in holding back on recruitment.
There were 843,000 working days lost because of labour disputes in December 2022, which is the highest since November 2011. We wait to see if January and February follow a similar pattern.
Kate Shoesmith, deputy chief executive of REC, commenting on the latest figures said:
“This is a very steady set of job figures and further evidence of the UK’s robust labour market – which is good news, given the global levels of uncertainty right now. But when both productivity and economic inactivity are not improving from pre-pandemic levels, we must focus on the fixes.
“Next month’s Spring Budget is the opportunity for government to provide further stability, clarity and much needed support so that the economy can thrive despite the now stubborn labour shortages. Improving childcare support and provision to enable more parents to work and older workers such as grandparents to stay in work is vital, as is reinvigorating welfare to work schemes. Where investment is needed, the government should keep in mind that the return will be far greater over the medium and long-term, helping to save money and boost growth. A failure to address shortages will only constrain growth and feed inflation.”
If you’re struggling to recruit and need our support to help you improve your recruitment success check out our hiring resources pages.
Source: ONS Labour Market update January 2023