The number of vacancies fell by 46,000 between August and October 2022. Despite vacancies dropping, the UK's unemployment rate decreased to 3.6% between July and September 2022, down 0.2 percentage points from the previous quarter.
The number of payrolled employees registered in October 2022 reached a record high 29.8 million, a 74,000 increase from September.
The UK's economic inactivity rate increased to 21.6% from July to September, with the largest contributing factor being a record number of people classed as long-term sick – 465,144 people between July and September.
Job vacancies in the labour market:
Joanne Frew, global head of employment and pensions at law firm DWF, predicted the labour market would get worse before it gets better.
She said: "The UK economy is certainly facing a challenging period with soaring inflation and the Bank of England warning that the UK could be set for its longest recession since records began. The chancellor, Jeremy Hunt, is due to deliver his autumn statement on Thursday 17 November and has already warned that tax rises are necessary to help tackle inflation.
"Against this backdrop it is likely that the labour market will face a relatively turbulent time. Despite the ongoing resilience of the market during the pandemic, it is likely that the economic difficulties will lead to more job losses over the coming months."
Average total pay for employees (including bonuses) increased 6% between July and September, while average regular pay (without bonuses) increased 5.7% in the same time frame. Although this was the strongest growth in regular pay seen outside of the pandemic, it still wasn't enough to keep up with inflation, which currently stands at 8.8%.
Gareth Vale, operations director at ManpowerGroup, said this could lead to issues with employee wellbeing going forward.
He said: "With average total pay including bonuses up by 6% but not keeping pace with inflation, some people are looking to work more hours or take on an additional role to supplement incomes to keep pace with rising costs. Employers will need to keep an eye on this in terms of staff wellbeing and the impact it could have on overall productivity and growth.
"The rising cost of living does appear to be bringing more older people back into the workforce but not currently at a fast enough rate to offset the rise of inactivity caused by those leaving the workforce and not being replaced, whether that’s because of long-term sickness or other reasons."
Strike action also had a major impact on the labour market during September as 205,000 working days were lost to labour disputes across the month.
Jonathan Boys, labour market economist for the CIPD, said businesses will struggle with recruitment and retention in the near future.
He said: "Recruitment and retention remain challenging for businesses as demand for candidates outstrips available supply. Although a recession may already be here, the labour market is often a lagging indicator, and it will be some time before we can see the downturn in official statistics.
"The cost of living crisis is not affecting all workers equally. Private sector regular pay grew by 6.6% compared with 2.2% for the public sector. The growing wedge between the two will make recruitment and retention in the public sector increasingly difficult."