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ONS reports record high of individuals returning to the workforce

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Online job vacancies continue to decline

The ONS has released its latest labour market report and it’s revealed that UK employment figures rose to 75.9% in January to March 2023, which is an increase of 0.2% from October to December 2022. This growth was primarily driven by part-time employees and self-employed individuals.

However, the more recent estimate for April 2023 shows a monthly decline in payrolled employees, dropping by 136,000 to reach 29.8 million, compared to the revised March 2023 figures. This marks the first decrease in total payrolled employees since February 2021, but it should be noted that this estimate is provisional and subject to revision when more data becomes available next month.

The unemployment rate for January to March 2023 increased by 0.1% from the previous quarter, reaching 3.9%. The rise in unemployment was largely influenced by individuals who had been jobless for over 12 months.

On the other hand, the economic inactivity rate declined by 0.4% in the same period, down to 21% in January to March 2023. This decrease in economic inactivity was mainly driven by individuals aged 16 to 24 years. Among the reasons for economic inactivity, the decline was primarily attributed to students or those inactive due to other reasons, while the number of individuals inactive due to long-term sickness reached a record high. According to Parliament UK, this figure has reached an alarming 2.5m.

Analysis of flows between October to December 2022 and January to March 2023 reveals a record high net flow of individuals transitioning from economic inactivity to employment. This shift was responsible for the increase in employment.

Between February and April 2023, the estimated number of job vacancies declined by 55,000 from the previous quarter, amounting to 1,083,000 vacancies. This marks the 10th consecutive quarterly decrease in vacancies, reflecting industry uncertainties as survey respondents cite economic pressures hindering recruitment.

In January to March 2023, average total pay growth, including bonuses, was 5.8%, while regular pay growth, excluding bonuses, stood at 6.7% for employees. The private sector experienced a higher average regular pay growth rate of 7%, compared to the public sector’s 5.6% in the same period. The public sector’s growth rate exceeded the private sector’s for the first time since August to October 2003 (5.7%).

Adjusted for inflation, both total pay and regular pay experienced a decline in real terms in January to March 2023. Total pay fell by 3%, while regular pay decreased by 2%.

Labour disputes resulted in 556,000 working days lost in March 2023, an increase from 332,000 in February 2023.

The report indicates that unemployment is still a concern, which remains above pre-pandemic levels largely because of those who have been out of work for over a year.

Dr Lindsey Zuloaga, Chief Data Scientist at HireVue (used by Aldi, M&S and Unilever) believes one of the main reasons for persisting unemployment is outdated practices in the hiring process that omit certain individuals from landing a job, resulting in long-term unemployment.

Lindsey commented: The unemployment rate in the UK has increased by 0.1% to 3.9%. There are now even more people out of work than before pre-pandemic employment levels. As it’s clear to every business, something is wrong either with the hiring process or with accessibility to jobs, as the number of jobseekers remains excessive, even though we are at a historically high vacancy rate. The question is: why are job seekers not attaining jobs while millions of roles sit empty? Our overattachment to the outdated CV, which is a mere indicator of employment history and not of skills or abilities, could be at the heart of these rising unemployment rates”.

Steve Sully, Regional Director, Finance & Accounting, at Robert Half also made comment: “While there may be a fall noted in jobs in the UK, the uptick in the number of people in self-employment is indicative of a continued growth in demand for highly skilled professionals in particular.

Candidate confidence and a need for better take home pay. Despite an overall growth in average pay noted by the ONS, the data does show that when adjusted for inflation, remuneration actually fell 3% for total pay year-on-year for Q1 of this year. With the cost-of-living crisis continuing to impact households across the country, this drop in pay could be driving more people into self-employment and contract work which can often be more lucrative for highly skilled professionals.”


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