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Vacancies fall as wage growth eases

When adjusted for inflation, pay rose by 1.4% between August and October

Vacancies continued to fall as pay growth began to level out, according to the Office for National Statistics (ONS).

From September to November, the estimated number of UK job vacancies fell by 45,000, to 949,000 vacancies. 

Neil Carberry, chief executive of the Recruitment and Employment Confederation (REC) said: “The number of vacancies is knocking on a million and, despite the longest period of falling numbers on record, is still above pre-pandemic levels. This shows the scale of the challenge we face with filling jobs.”

Read more: Labour shortage persists as employers turn to AI

Annual growth in regular pay excluding bonuses was 7.3% in August to October 2023. This growth continues to remain strong but is not as high as in recent periods.

When adjusted for inflation, pay rose by 1.4% between August and October.

Jack Kennedy, senior economist at jobs website Indeed, said pay growth is still high and is likely to mean interest rates remain high.

Speaking to HR magazine, Kennedy said: “The latest figures showed regular pay growth easing but it remains very high. Wage growth remains one of the key metrics for Bank of England rate setters and how persistent it proves into 2024 will be a key determinant for the timing of any monetary policy easing.”

The UK employment (75.7%) and unemployment (4.2%) rates were largely unchanged since the previous quarter.

The economic inactivity rate was largely unchanged since the previous quarter at 20.9%.

Jon Boys, senior labour market economist for the CIPD, said skills shortages will continue to plague employers unless they improve the quality of work.

He said: “The government has signalled intentions to lower immigration, and we have an ageing population, both of which will weigh on labour supply. 

“In such conditions people have options and employers and policymakers should reach for the carrot before the stick when seeking to get people into work. Creating quality jobs that enable people to balance competing priorities is key.

“This means more than just pay, but careful job design too. Flexibility and autonomy are highly valued and allow people to manage a work-life balance.” 

Read more: New migration rules will worsen labour shortages

Michael Stull, director at employment agency ManpowerGroup UK, said employers will likely re-enter the hiring market next year.

He said: “Even though most organisations are feeling understandably cautious going into 2024, their intent to hire is staying strong because they are facing more pressure than ever to plug those skills gaps.

“Those who are prepared to pivot, consider new ways of doing things, and embrace new technologies and skill sets with confidence, will have the best chance of unlocking growth and seeing positive changes in the new year.”