New hires fall to lowest level since 2021
Businesses continue to be more cautious in recruiting new staff as official labour market figures continue to show a falling number of vacancies.
The Office for National Statistics (ONS) found that early job vacancy estimates for March to May suggest a decrease of 19,000 (2.6%) vacancies to 707,000, compared with December to February. This is the lowest level since February to April 2021.
While the unemployment rate fell from 5.2% to 4.9% over the latest three months, the employment rate also decreased slightly from 75.1% to 75%.
Ben Harrison, director of the Work Foundation at Lancaster University, said today’s statistics show the labour market remains in a precarious position.
“While unemployment may have fallen slightly from last month to 4.9%, 124,000 more people are out of work relative to last year. More than two-thirds of this increase has been driven by young people aged 18 to 24, while youth unemployment remains well above the level seen for much of this century.
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“At the same time, opportunities to gain a foothold in the labour market have declined. Recent Work Foundation analysis of Adzuna data found that the number of ‘starter’ jobs available to first-time entrants has fallen by 49% over the last decade.”
“And while overall vacancies have declined to their lowest level since 2021 at 707,000. This is particularly bad news for young jobseekers who are facing an increasingly sparse and challenging jobs market. While total vacancies have fallen in recent years, the decline in starter jobs has been 1.6 times faster than for other jobs in the last 12 months.”
Average annual growth in regular earnings (excluding bonuses) was 3.4% and 4.4% for total earnings (including bonuses).
Annual average regular earnings growth was 5.1% for the public sector and 2.9% for the private sector. Public sector pay growth is affected by the timing of pay awards varying this year.
Liz McKeown, ONS director of economic statistics, said regular wage growth in the private sector was rising at its lowest rate in five and a half years.
The figures come after yesterday’s inflation figures showed that the consumer prices index (CPI) in May stood at 2.8%, while CPI including owner-occupier housing costs (CPIH) was 3.0% – both unchanged on the previous month.
The retail prices index (RPI), the inflation measure cited by trade unions, ticked up slightly to 3.1%, up from 3.0% in April.
Andrew Crawford, senior vice-president at LHH UK and Ireland, said: “Today’s labour market figures show the reality of rising employment costs and the national insurance contributions hike. Despite growth at the beginning of the year, the current economic climate is forcing many employers to freeze hiring, negatively impacting the UK’s job market.
“The impact is being felt as more workers are staying in roles, with 51% are worried about being made redundant by their current employer. This uncertainty is likely set to continue for a time as nine in 10 UK businesses have made or are planning to make redundancies this year, with AI and automation being the top driver of layoffs for the first time.”
The Recruitment and Employment Confederation’s director of campaigns Shazia Ejaz said: “Much of the job market is on standby mode as employers wait for clearer signals while geopolitical tensions unfold. Global pressures and domestic political uncertainty are making employers hesitant to commit to hiring although latest REC data shows temp hiring is faring better than permanent.
“While employment and unemployment levels remain broadly steady in today’s data, this is a difficult labour market for jobseekers. Vacancies are falling across most sectors and workforce jobs are declining across many regions, showing demand for staff is easing.”
TUC general secretary Paul Nowak said: “While Donald Trump has declared an end to his illegal war in Iran, the economic shockwaves he unleashed are only beginning to ripple through to the labour market – and young people are among the most at risk.
“Improvements in the jobs market from the start of the year have offered workers and businesses some protection, but today’s figures suggest challenging months are ahead. Falling vacancies and stagnant real wages mean jobs and living standards are at further risk.
“We must do more to address youth unemployment. The government’s jobs guarantee is an important start, but far more places are needed, and young people shouldn’t have to be stuck out of work for a year and a half before they can benefit.
”The sheer number of young people not in employment, education, or training should be front of mind when the Bank of England meets today. It’s time to cut interest rates to boost investment and strengthen the economy.“
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