Employment figures are stalling with economic inactivity rising, say analysts – meaning a need for greater action by the Government to fill vacancies.
Unemployment continued to fall in the last quarter – down from 4.2% to 4.1%, but in the last month employment has stalled and the number of people who are economically inactive is rising, according to today’s Labour Market Statistics.
The statistics cover the period from September to November 2021. They also show that wage rises are not keeping up with inflation, particularly for those in the public sector. Average total pay, including bonuses, grew by 4.2% in the September-November quarter, while basic pay (excluding bonuses) was 3.8%. However, consumer price inflation (CPI) rose to 5.1% in November and is expected to reach 6% by April when energy bills take a sharp turn upwards.
The Institute for Employment Studies [IES], which is calling for a new Plan for Jobs, says the figures are “disappointing”., with employment overall now 600,000 lower than it was on the eve of the pandemic.
Because employment was growing for the decade before the crisis, IES estimates that there are now 1.1 million fewer people in the labour market overall than there would have been had those pre-crisis trends continued. The IES estimates three fifths of this gap is explained by fewer older people in work, especially older women. At the same time, the number of people who are out of work due to long-term ill health has risen to its highest level since 2004.
It says: “This weak recovery in employment is despite record levels of vacancies – and so is driving growing recruitment problems and labour shortages.” It adds that there are now just 1.1 unemployed people per vacancy – the lowest figure in at least 50 years. That has changed rapidly. A year ago, there were more than three (3.2) unemployed people chasing each job.
IES Director Tony Wilson said: “With nearly as many vacancies as there are unemployed people, employers are facing the tightest labour market in at least fifty years, with labour shortages now holding back our recovery. As each month passes these issues appear to be getting worse, with the recovery clearly stalling on the eve of the Omicron outbreak. So as we start the new year we need a new ‘Plan for Jobs’ that will raise participation and tackle the recruitment crisis.”
Chris Sanderson, CEO of the hospitality recruitment app, Limber, says one problem is that employers are not willing to be flexible enough to attract a wider pool of candidates: “Job vacancies were sky high in the closing stages of 2021, but firms found it difficult to fill them. Too many employers have reverted to rigid, pre-pandemic work patterns, which are deeply out of sync with what people now want. This dilemma is especially pronounced in the hospitality sector, with companies struggling to recruit because they are not flexible enough. Traditional job ads are gathering dust as many people are simply no longer interested in the legacy mindsets of the companies behind them. Employers need to accept, rather than resist, the world we are now in.”
Meanwhile, the Unite, Unison and GMB trade unions have submitted a joint pay claim to the Convention of Scottish Local Authorities that is designed to help local government staff with the rising cost of energy prices and inflation. Among other requests, it is asking for a £3,000 pay rise across all salary points and a minimum wage of at least £12 per hour. Proposed terms also involve a no-detriment shift to a 35-hour work week, the payment of all professional fees as a result of employment, agreed guidance on home or hybrid working and the uprating of all allowances in line with inflation figures from October.