Warning over job vacancy levels, despite slight fall

The number of job vacancies in June to August fell slightly on the previous quarter, according to the Office for National Statistics, but the UK is still a ‘historically tight labour market’ due to high vacancies and high unemployment.

Experts are warning that a failure to tackle long-term health issues is holding the economy back and boosting inflation.

Unemployment is at 3.6%, the lowest rate since May to July 1974, and the ONS says job vacancies are still above pre-Covid and early 2021 levels. In June to August 2022, vacancies were 470,000 (59.1%) above the January to March level and 215,000 (20.4%) above the same time last year.

The industry sectors showing the largest falls in vacancy numbers were the information and communication industry, which was down 11,000 vacancies and the professional, scientific and technical activities industry, which was down 8,000 vacancies on the quarter. Human health and social work had the largest increase in vacancies, up by 7,000 on the quarter.

The ONS says the fall in vacancies, the second quarterly fall in consecutive periods, “may reflect uncertainty across industries, with an increased number of respondents reporting recruitment freezes”.

It also notes that the increase in vacancies since Covid is due to employee jobs, with self employment having fallen sharply.  It says employee jobs in June 2022 have continued to grow and are now at a record high of nearly 31.5 million, 710,000 above their December 2019 pre-coronavirus level. Despite a rise this quarter, self-employment jobs, however, remain 548,000 below December 2019 levels.

The jobs vacancies are driven in part by the high rate of economic inactivity rate, which increased by 0.4 percentage points on the quarter to 21.7% in May to July 2022. This was largely linked to students aged 16 to 24 years and long term sickness among 50 to 64 year olds.

Meanwhile, growth in employees’ average total pay (including bonuses) was 5.5% and growth in regular pay (excluding bonuses) was 5.2% in May to July 2022. In real terms (adjusted for inflation), over the year, total pay fell by 2.6% and regular pay fell by 2.8%.

Tony Wilson, director of the Institute for Employment Studies, highlighted the number of people who are out of work due to long-term ill health, which is rising faster than at any point over at least three decades. He said this should be “sounding alarm bells in government”.

He stated: “This weak jobs recovery is being driven by more people out of work due to long-term ill health, up by 350,000 since the pandemic and by 130,000 in the last three months alone.  NHS waiting lists, poor mental health, a lack of specialist employment support and long covid will all be playing a part in this, but whatever the reasons we need to do far more to help those with ill health to prepare for, find and keep work.

“For a government that wants to cut taxes to boost growth, today’s figures also spell trouble.  If we don’t do more to help more people into work, then any tax cuts will just lead to even higher inflation and higher interest rates for longer.”

Other experts said the fall in vacancies could be a sign of increasing uncertainty among employers about the economic outlook. Ben Keighley, founder of social media recruitment specialist Socially Recruited, said: “A record number of UK people in jobs cannot mask the feeling of a chill in the labour market.

“The fact that 35.8 million people are in work, exceeding the pre-Covid high for the first time, suggests a rosy outlook, but the fall in the total hours being worked tells a different story of hatches being battened down.

“While vacancies remain high they are falling in two-thirds of sectors, as economic uncertainty is leading many businesses to consider recruitment freezes.”

Manpower has also just published research suggesting workers are still resisting pressures from their employers to return to the office. However,  it suggests this could be changing as worries about the potential impact of the cost of living crisis on jobs and a slowdown in vacancies in some sectors have started to shift the balance away from workers towards employers.

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