The UK job market is showing signs of cooling off, with recent data indicating increased unemployment and slowing wage growth. According to the latest figures from the Office for National Statistics (ONS), the unemployment rate for those aged 16 and over stood at 4.3% between July and September 2024, up from 4% the previous quarter. This rise is not only concerning but also signals broader economic issues.
The figures, released on November 12, 2024, highlight not just the uptick in unemployment but also the overall employment numbers. Between August and September 2024, there was a drop of 9,000 employees on payrolled positions, signalling possible instability. While there was some growth compared with the same time last year, with 136,000 more payrolled employees, the declining trend is troubling.
Adding to the conversation, annual earnings growth, excluding bonuses, fell to 4.8%—the lowest rate recorded in over two years. While it’s positive to see earnings outpacing inflation, the pace is moderative and reflects concerns about economic capacity. The circumstances are ripe for workers to feel the squeeze again, especially as inflation still looms large over household budgets.
Labor disputes seem to exacerbate the situation, as ONS estimates point to 48,000 working days lost due to such conflicts throughout September 2024. Workers and unions are demanding more from the government and employers, indicating widespread unrest within sectors heavily impacted by economic strains.
Liz Kendall, the Work and Pensions Secretary, commented on the statistics by acknowledging some good news for employees when it came to pay. Still, she emphasized the necessity for more aggressive efforts to bolster living standards and create pathways for employment. The backdrop is one of inflation and soaring living costs, which complicate the scenario for many households.
Ben Harrison, director of the Work Foundation think tank, pointed out the contrasting picture of seeming stability against slumping vacancies and stagnant wages. This perspective couples with the stark reality of long-term sickness keeping many from the job market. Since early 2020, there have been 671,000 additional individuals reported as economically inactive due to long-term health issues. Harrison cautioned, “If the UK government is to meet its intended 80% employment rate, it must address the high levels of long-term sickness.”
The long-term impacts of previous economic downturns became evident as Harrison mentioned over 2.7 million people have been out of the labor market because of health conditions since just last year— highlighting the need for structural changes to welfare systems, focusing less on punitive measures and more on long-term solutions.
The demand for workers is also waning, with vacancies decreasing for the 28th consecutive month, with employers appearing less confident to hire amid rising overhead and National Insurance contributions. Harrison warned, “Wage growth is continuing to soften from the highs of 2023, but we’re still witnessing positive real pay growth for 16 consecutive months. This situation arises from more than ten years of stagnation, meaning potential workers are caught between unsteady jobs and savings reduced to essentials due to rising living costs.”
Neil Carberry from the Recruitment and Employment Confederation echoed these sentiments, noting today’s labour statistics reflect anticipated cooling trends concerning wages and job vacancies portrayed by business surveys. The Bank of England’s decision to adopt interest rate cuts spots potential for improving growth, but only if the government invests to stimulate the economy.
With the government braces for more fluctuations, recent announcements include changes to the minimum wage structure coming next April. Chancellor Rachel Reeves confirmed significant increases to minimum pay—over three million low-paid workers will see their hourly rate rise to £12.21. This progressive shift aims to support working people back to sustainable means, albeit still less than the Living Wage Foundation’s recommended rate of £12.60, which is currently offered voluntarily by about 15,000 employers.
While these wage increases are welcomed, many question whether they genuinely address long-standing pay equity concerns. The new wage strategy seeks to unify varying minimum wage rates and push forward working standards under the Labour government. The emphasis is on ensuring workers receive fair remuneration amid high inflationary pressures.
The future of the UK’s job market hangs uneasily. There are positive notes like pay adjustments and government commitments, but persistent issues such as unemployment, wage stagnation, and economic uncertainties remain. The labour market’s responsiveness to external shocks will prove pivotal, with analysts urging quick action to bolster not just wages but the overall employment ecosystem.
For now, as we head toward economic resolutions, all eyes will remain fixed on the actions of both the government and employers to navigate these challenges. The upcoming months will tell whether the prices on our wallets and futures will stabilize or continue to waver.
