The latest labour market stats show there is continued strong demand for candidates as evidenced through record vacancy levels which is broad based across all sectors. The challenge for businesses is that there are fewer candidates available as unemployment continues to edge down while employment edges up. Increasing attention is being paid to the inactive group which has grown during the pandemic and in many cases represents people leaving the labour market entirely. A permanently smaller UK workforce compounds recruitment difficulties for employers. Policymakers will also worry about the effect on savings and pensions of early exit from the labour market.
Regular pay in the year to December was not able to keep up with inflation, meaning many people had less money in their pockets in real terms. But some are feeling the squeeze more than others. Private sector pay is performing better than public sector pay. If a gap opens up between the two, it could make recruitment into the public sector increasingly difficult.
Responding to today’s ONS figures, Jonathan Boys, labour market economist for the CIPD, the professional body for HR and people development comments:
“Today’s figures show that employers will have to work even harder in 2022 to both find and keep staff as vacancies remain at record levels and more workers take advantage of a job-seeker friendly market to find a new and better job.
“The official statistics reflect the CIPD’s latest Labour Market Outlook which suggests that retention is becoming as important as recruitment in maintaining a steady workforce. The redundancy rate is below pre-pandemic levels as employees seek to stem the flow of workers out of the firm.
“There is no doubt many employers will be under more pressure to raise wages this year as they face the twin pressures of helping workers deal with rising cost of living and further tightening of the labour market. The playing field is level here as all employers face this same pressure. However, not all are able to raise pay. Encouragingly, the CIPD’s research shows that many employers are thinking about the employment offer in the round, including opportunities for training and development.
Boys continues: “We know that a large increase in inactivity is a result of long-term illness and much of the increase in inactivity is the over 50s. Employers must work harder to design jobs that suit everyone’s preferences. This means increasing focus on job quality and making reasonable adjustments to help those with long-term health conditions to stay in work.
“Organisations need to ensure they advertise jobs as flexible wherever possible. Investing in staff development and creating internal progression opportunities will also be key to both broaden the range of candidates employers can attract and address skills gaps by training and promoting existing staff where they can.”