Job vacancies remain high but salaries suffer

The number of job vacancies in the UK held steady at 460,493 in May but only because employers are keeping a lid on wages and hiring at low salary levels, according to the latest UK Employment Market Report from Adzuna, the search engine for jobs.

The average advertised salary in May was 1.7% lower than twelve months ago, a drop of £571 over the course of year and fell 0.2% month-on-month, currently standing at £33,617 p.a. Taking inflation into account, the real terms drop in salaries is even more pronounced. With CPI inflation running at 2.7% in May, the average advertised salary has fallen by 4.4% (£1,504) in real terms since May last year.

The only regions where average salaries have increased in the past six months are London (+3%) and the South East (+1%). Wales and Eastern England have seen the steepest drop, with average salaries falling by 4% in each region since last November.

Flora Lowther, head of research at Adzuna, explains: “Until last month, job numbers had increased every month this year, which is testament to the resilience of the labour market in an environment where economic growth is anaemic. But salaries have paid the price. Rather than making redundancies and freezing hiring, employers are keeping a lid on the wages of existing employees and hiring new staff at lower salary levels. Wages have fallen by over £1,500 in real terms since last May, which indicates a fall in employer confidence.”

Job vacancies in May were up 1.4% from 454,254 in the same month last year, but fell a negligible 0.1% from 460,977 in April.

Regional disparities

Adzuna, who collect every online job vacancy and analyse the data in real time, reveal there were pronounced regional variations in job vacancies in May. In Aberdeen, the easiest place to find a job in the UK, there were just 0.37 job seekers per vacancy. In the Wirral, the hardest, there were 56 per job.

The data reveals a prominent north-south divide in employment opportunities. All of the top 10 places with the lowest number of jobseekers per vacancy were in the south, while 8 of the 10 hardest places to find a job were in the north.

However, the divide has closed marginally over the past six months. Competition for jobs increased 4% in London, while falling 4% and 3% in Liverpool and Derby respectively.

Flora Lowther comments: “Strong UK-wide employment and vacancy levels are camouflaging a number of underlying weaknesses in the labour market. One of those is the health of regional job markets. In some areas, notably the North West, East, and parts of Yorkshire, the labour market is suffering, partly thanks to public sector austerity. In areas like the Wirral – where there are 56 jobseekers per vacancy – the weakness of the private sector means it hasn’t been able to fill the space left by public sector redundancies, which has led to fierce competition for a small number of vacancies. The private sector is stronger in southern areas, so has been more resilient to public sector cuts, which is why there are fewer jobseekers and more vacancies.”

Salaries by sector: IT wages roaring ahead

Although salaries fell on a national basis, the IT sector proved immune to the trend. IT salaries rose 5% between November and May to reach £43,127 on average, the biggest increase in any sector. Over half a million new IT jobs have been created in the past six months, suggesting the UK is making strides in its journey towards becoming a high-tech economy.

There was also good news in the construction sector, cited as a key sector for boosting economic growth, where the number of open vacancies rose 3.7% over the past six months to 17,924.