Today, the UK labour market is experiencing great turbulence. Looking ahead, new employment is tracked by a decline in payroll and help-wanted postings plummeting. That means between March and April payroll numbers decreased by 55,000. Going into May, experts are predicting an even more dire loss of 109,000. This acceleration of people leaving the labor market will increase the unemployment rate. It has since already increased from 4.5% to 4.6%, the highest level in almost four years.
According to the UK’s Office for National Statistics (ONS), that was a significant drop. Instead, they discovered that 63,000 fewer jobs were posted in the same time frame. This decline is emblematic of a wider trend of softening in the labour market. That makes the estimated total of job openings 736,000 in the latest three months ending in May.
Liz McKeown, director of economic statistics at the ONS, said this about the state of today’s labour market.
“There continues to be a weakening in the labour market,” – Liz McKeown
McKeown further noted that there has been a “noticeable drop in the number of people on payrolls,” indicating a trend that could impact future employment statistics. She mentioned that feedback from their vacancies survey suggests some firms are hesitant to recruit new workers or replace staff who leave.
The situation is causing concern among economists. Yael Selfin, chief economist at KPMG UK, pointed to a new direction increasing in popularity. Businesses will need to lay off more workers and reduce hiring due to the increased cost of employment.
“It is likely that businesses will look to offset some of the rise in employment costs through a combination of reducing headcount and slowing hiring activity,” – Yael Selfin
As inflation surges too, hitting 3.5% annualized for April, the outlook looks even more daunting. The red line, average wage growth, has decelerated to only 5.2% from February through April. This slowdown makes the picture more complicated for employers and employees alike.
Ruth Gregory, senior economist, noted that the writing is on the wall with almost all indicators showing a drop in labour demand.
“Most indicators show labour demand is clearly weakening,” – Ruth Gregory