The ONS has published its latest labour market figures, which shows unemployment reaching a new record low and another record number of vacancies.
Unemployment has fallen to its lowest rate since 1974 (3.7%). There are fewer unemployed people than job vacancies for the first time since records began.
The statistics also show that job vacancies reach another record high (1.295m), but growth is slowing.
Employment increased by 0.1 percentage points on the quarter to 75.7 percent.
Job-to-job moves increased to a record high of 994,000, driven by resignations rather than dismissals.
In real terms (adjusted for inflation), growth in total pay was 1.4 percent and regular pay fell on the year at negative 1.2 percent.
“Despite employment continuing to rise, today’s figures underline the challenges facing workers who are seeing inflation eat away at their living standards. With regular pay at 4.2 percent (excluding bonuses) being outpaced by rising inflation at 7 percent – and the Bank of England warning of a recession and that inflation could rise to 10 percent – workers in low-paid and insecure employment are facing huge uncertainty and tough choices as the cost of living crisis bites,” warns Director of the Work Foundation at Lancaster University, Ben Harrison.
How should the government and employers be reacting?
“For weeks the Government has hinted at extra help to come, yet all workers will have heard this week is that they are not to ask for pay rises and that if they’re struggling they simply need to work more hours or get a better paid job,” says Mr Harrison.
“It is vital that we see targeted support delivered now via an Emergency Budget. As a priority, the Government must find a way to uprate benefits in line with inflation – or introduce measures to the same effect – to provide more security to those most in need,” suggests Mr Harrison.
With the Great Resignation still in full swing, the record number of vacancies seen in these figures is no surprise.
“Vacancies sitting at a record high and labour availability only created by resignations doesn’t help employers. As quickly as they are filling roles, they are losing people,” says Aspire founder and chairman, Paul Farrer.
However, Chief Executive of the Recruitment & Employment Confederation (REC), Neil Carberry, highlights one benefit to these soaring vacancies: “These figures tell the story of a vibrant but stretched labour market in the first quarter of 2022. It’s a great time to be looking for work, as there are now fewer unemployed people in the UK than there are job vacancies.”
Nonetheless, “employment levels and hours worked are still lower than before the pandemic, as more people are not working and also not looking to. Over time, this capacity constraint can only slow growth and contribute to inflation. Business and government need to work together on ways to attract more people back into the labour market, as well as ensuring the new immigration policy addresses fundamental gaps,” adds Mr Carberry.
The cost-of-living crisis
Head of EMEA research at Indeed, Pawel Adrijan, says:
“The labour market remained on solid footing despite the 0.1 percent contraction in GDP in March as hiring activity remained high, with 2.1 million people starting a new job in the first quarter of the year.
“However, clouds are gathering on the UK’s economic outlook and with the cost of living crisis deepening, this could be the last strong month before we see a slowdown in the labour market, which tends to be a lagging indicator .”
“For the first time ever we’re seeing fewer unemployed people than job vacancies, with unemployment down to pre-pandemic levels of 3.8 percent – last seen in December 2019. Although growth has slowed, there’s still a record 1.3 million job vacancies to be filled in the UK adding further pressure on employers looking for workers.
Commenting on how staff shortages are also contributing to rising pay, Mr Carberry argues that this will only be sustainable if we can grow a productive and competitive economy. Encouraging that growth needs to be the key focus for government moving forward. The cost-of-living crisis won’t be solved by slogans, or trade wars.”