The labour market is “reasonably steady”, according to Neil Carberry, chief executive of the Recruitment and Employment Confederation (REC), a professional body for recruitment professionals.
The UK employment rate (for people aged 16 to 64) was 74.8% in May to July 2024, which is below estimates of a year ago but an increase from the last quarter. Over the same period, the UK unemployment rate was 4.1%, and the economic inactivity rate was 21.9%; these are both decreases from the previous quarter.
From June to August 2024, the estimated number of vacancies in the UK decreased by 42,000 compared to the previous quarter. Vacancies decreased on the quarter for the 26th consecutive period but are still above pre-pandemic levels.
Speaking exclusively to HR magazine, Daniel Pell, vice president of UKI of the HR software company Workday, said: “The UK job market, while not as competitive as in recent years, still faces significant challenges. ONS shows a continued decline in vacancies, which could lead to greater competition for jobs.
Read more: “Cautious” job market as employment slowly rises
“Workday data indicates that despite our UK customers having processed 872,000 job requisitions this half – an 8% increase compared with the first half of 2023. There’s more competition for talent, with 5.1 million job applications, a 22% increase compared to the same period.
“This shift indicates that the balance of power is now leaning more toward employers. However, businesses must continue to pay attention to job seekers' expectations, as attracting top talent remains crucial. Candidates are looking for a balance between productivity and flexibility, alongside opportunities for career growth and fair compensation. While wage growth in the UK is expected to stabilise in 2024, this may influence job seekers' ability to negotiate.”
However, Jack Kennedy, senior economist at Indeed, warned that the increased volatility of Labour Force Survey estimates, resulting from smaller achieved sample sizes, means that estimates of change should be treated with caution.
He said: “Though the unemployment rate dipped, ongoing methodology work to the Labour Force Survey means this figure should be taken with a pinch of salt.”
Read more: Cooling labour market as high interest rates persist
According to Joanne Frew, global head of pensions and employment for the law firm DWF Law, forthcoming legal changes are driving the job market slowdown, leading to increased caution among employers.
She told HR magazine: “The labour market has remained relatively steady throughout an incredibly turbulent period, albeit that employers are taking a cautious approach to staffing.
“With an unprecedented amount of employment law reform on the horizon, employers are taking the opportunity to take stock and review their current systems and processes, to evaluate the impact of the forthcoming changes. We have been promised extensive consultation on suggested reform. This will provide employers with a crucial opportunity to help shape the narrative. In the meantime, we are likely to see a slowing in the job market until employers feel comfortable with the future direction of the government plans."
In June 2024, the estimated number of workforce jobs was 37.1 million, up by 503,000 from the level of a year ago but down by 28,000 on the quarter.
Annual growth in employees' average regular earnings (excluding bonuses) was 5.1% in May to July 2024, and annual growth in total earnings (including bonuses) was 4%. This total annual growth is likely affected by one-off payments made in June and July 2023 within the NHS and civil service, as part of pay deals.
Annual pay growth in real terms (adjusted for inflation), excluding bonuses, was 2.2% in May to July 2024. For total pay, it was 1.1%.
According to Carberry, slower pay growth will drive business confidence: “The slowdown in pay is quite clear now, despite the effects of awards in the public sector this summer. This should give confidence to the Bank on the future path for interest rates. A lower cost of capital could also drive confidence in business to invest.”
An estimated 42,000 working days were lost because of labour disputes across the UK in July 2024. Most of the strikes were in the health and social work sector.
