Pay offers soar as workers prioritise job safety

Employees' total pay (adjusted for inflation) was 2.2% on the year

Pay growth continued to rise while unemployment increased, the latest labour market data from the Office for National Statistics showed (11 June).

The employment rate (for people aged 16 to 64 years) decreased year-on-year and quarter-on-quarter, to 74.3%, while the unemployment rate was at 4.4%, an increase on the year and the quarter.

Meanwhile vacancies continued to decrease for the 23rd consecutive period, by 12,000 on the quarter to 904,000. This remained above pre-Covid-19-pandemic levels. 

Novo Constare, CEO and co-founder of temporary work platform Indeed Flex, told HR magazine employers were having difficulties recruiting talent due to employees prioritising job security.

He commented: “While consumer inflation has cooled, many workers are still prioritising job security over seeking higher pay elsewhere. 

“Meanwhile, factors like childcare costs or travel expenses can deter those out of work from re-entering the workforce.”

Ben Keighley, founder of AI recruitment platform Socially Recruited, explained that pay growth continued to climb as employers attempted to use high salaries to attract talent.

Annual growth in regular earnings (excluding bonuses) was 6% in February to April 2024, and annual growth in total earnings (including bonuses) was 5.9%.

Annual growth in real terms (adjusted for inflation) for regular pay was 2.3% in February to April 2024, and for total pay was 2.2%.

Speaking to HR magazine, Keighley said: “Fierce competition for labour is driving pay rates upwards as sought-after candidates are offered lucrative salaries to prise them away from their current employer. 

“In response, strategically minded employers are taking a highly targeted approach to recruitment, attracting desirable ‘passive’ candidates who may not have been actively seeking a change of employment.

“This trend is likely to continue for some time as recruitment is heavily impacted by shrinking talent pools, as well as the cost implications of making the wrong hire.”

Read more: “Sluggish” labour market could stunt long-term growth

Analysis by the Trades Union Congress found that the UK had the fastest rising unemployment rate out of the 38 countries who are members of the Organisation for Economic Cooperation and Development.

Jack Kennedy, senior economist at job listings platform Indeed, told HR magazine the tight labour market posed a challenge for the next government.

He said: “The latest figures show a now-familiar combination of further cooling in the labour market but stubbornly strong wage growth. 

“Meanwhile, a further increase in inactivity underlines the challenge facing the next government in bringing more workers into the labour force.”

The economic inactivity rate was estimated at 22.3% in February to April 2024, up on the year and the quarter.

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However the job market could improve as cost of living pressures eased, Constare added.

He commented: “Recent signs of improving economic conditions, with falling inflation rates, could positively impact the labour market if the trend continues. 

“As the cost of living pressures ease, workers may be more inclined to seek new job opportunities, potentially alleviating skills shortages and staffing challenges faced by employers.”