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Navigating the Changing Labour Market – Insights for Employers

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The UK labour market has undergone significant changes over the past few years due to the pandemic and ensuing economic turbulence. As a recruitment agency working with employers across sectors, we keep a close eye on the latest labour market statistics to identify trends that may impact hiring and business operations.

 

Recent UK Labour Market Data

Below are some key takeaways from the UK’s most recent labour market data and what they could mean for employers:

 

Employment Levels Rebounding but Still Volatile

The latest figures from the Office for National Statistics (ONS) show that employment levels are rebounding after pandemic-related declines. 33.17 million people aged 16+ were employed in the UK in Oct-Dec 2023, an increase of around 107,000 from the previous year.

However, the ONS has flagged issues with data reliability, especially around quarterly changes, so employment levels remain volatile. Employers planning growth may still face recruitment challenges as the workforce steadily recovers. Competition for talent could push up wage expectations among job seekers.

Unemployment Dropping but Economic Inactivity Rising 

On the upside, UK unemployment fell slightly to 1.32 million people aged 16+ in Oct-Dec 2023. The unemployment rate of 3.8% signifies a tight labour market where most people seeking work can find jobs.

Yet economic inactivity also rose by around 120,000 to 9.28 million people aged 16-64 over the last year. Early retirement and long covid symptoms are keeping over 2 million people out of work. Employers must cast a wider talent net to capture skilled individuals among the inactive population.

Real Wage Growth Turning Positive

Average UK wages showed real terms year-on-year growth for the first time in 2023, rising by 1.6% including bonuses and 1.9% excluding bonuses in Oct-Dec 2023. But nominal pay growth slowed, reflecting easing inflation and demand pressures.

As the cost of living stabilises, employers may have more latitude in setting pay rates that balance productivity goals, employee expectations and business affordability. However, real wages are still catching up after sharp declines. Some industries or skills may warrant above-average pay rises to attract talent.

 

In summary, employers face a complex mix of slowing economic growth but also persistent hiring, retention and wage pressures in today’s labour market. Specialist recruiters like Four Squared Recruitment leverage in-depth labour market insights to craft workforce solutions that meet our clients’ unique needs. Reach out to discuss how we can support your business amid evolving conditions.

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