UK Job Vacancies Drop for 8th Month in a Row as Firms Hold Back on Hiring

A man walks past a job centre in Manchester, United Kingdom, on July 8, 2020. Phil Noble/Reuters

Job vacancies across Britain have fallen for the eighth month in a row, as businesses hold back on recruitment amid economic pressures, new data show.

According to the latest figures from the Office for National Statistics (ONS), Britain’s unemployment rate remained unchanged at 3.7 percent in the three months to January.

But the number of vacancies from December 2022 to February 2023 decreased by 4.3 percent—or 51,000—from the preceding three-month period.

Quarterly vacancy numbers have fallen for the eighth consecutive period, with vacancies falling in 12 of the 18 industry sectors.

Total vacancies were down by 162,000 from the level of a year ago, although they remained 328,000 above their pre-pandemic levels.

The ONS said the fall in vacancies “reflects uncertainty across industries, as survey respondents continue to cite economic pressures as a factor in holding back on recruitment.”

Pay Remains Under Pressure

The latest figures revealed that pay remained under pressure despite declining inflation, while the data showed that wage growth has eased back sharply.

The ONS said total wages including bonuses lifted by 5.7 percent in the three months to January, with regular wages, excluding bonuses, increasing by 6.5 percent.

This was lower than the 6 percent growth for total pay and 6.7 percent for regular pay seen in the previous quarter.

With Consumer Prices Index (CPI) inflation taken into account, real regular pay fell by 3.5 percent and total pay including bonuses was 4.4 percent lower.

Darren Morgan, director of economic statistics at the ONS, said: “Although the inflation rate has come down a little, it’s still outstripping earnings growth, meaning real pay continues to fall.

“However, the gap between earnings growth in the public and private sectors has narrowed sharply.”

The figures also showed there were 220,000 days lost to strike action in January, down from 822,000 in December, with schools the hardest hit.

Labour Shortages

The ONS said the rate of economic inactivity eased back to 21.3 percent in the quarter to January from 21.5 percent as more young people returned to work amid the cost-of-living crisis.

There were 65,000 more people in employment quarter-on-quarter in the three months to January at 32.8 million, while the number of unemployed rose by 5,000 to 1.3 million, according to the ONS.

Morgan said: “The number of people neither working nor looking for a job fell overall, driven by a drop in young people. However, a record number of people were completely outside the labour market due to long-term sickness.”

Chancellor of the Exchequer Jeremy Hunt (right), with Energy Secretary Grant Shapps, speaking at a meeting of senior leaders from across UK green industries at Queen Elizabeth Olympic Park, east London, on Feb. 21, 2023. Stefan Rousseau/PA Media

The data come ahead of the Spring Budget on Wednesday, when Chancellor of the Exchequer Jeremy Hunt is expected to announce ways to encourage older workers back into the jobs market to help with the UK’s shrinking workforce.

Tackling economic inactivity is a key component of Hunt’s plans, as employment numbers have languished far below their pre-pandemic levels, harming the UK’s already-struggling economy.

Commenting on the figures, the chancellor said: “The jobs market remains strong, but inflation remains too high. To help people’s wages go further, we need to stick to our plan to halve inflation this year.

“Tomorrow at the Budget, I will set out how we will go further to bear down on inflation, reduce debt, and grow the economy, including by helping more people back into work.”

The main opposition Labour Party accused the government of failing to help people back to the job market.

Jonathan Ashworth, Labour’s shadow work and pensions secretary, said: “The Tories’ abject failure to support people back to work means there are 234,000 fewer people in employment than before the pandemic.

“While other major economies have bounced back, Britain is languishing under the Tories and families are paying the price.”

Interest Rates

Despite the recent signs of easing, the UK’s inflation rate has remained in double digits.

Last month, the Bank of England, the UK’s central bank, raised interest rates for the 10th time in a row, hiking the base rate from 3.5 to 4 percent to help bring down inflation.

But according to experts, the slowdown in wage growth takes the pressure off the Bank of England to raise interest rates again next week, especially in light of the turmoil sparked by the collapse of Silicon Valley Bank and another U.S. lender at the weekend.

The central bank’s Monetary Policy Committee has been watching pay growth in the UK closely for signs that sky-high inflation may be becoming entrenched in the economy.

Economist Samuel Tombs, at Pantheon Macroeconomics, said: “Today’s labour market report strengthens the case for the Monetary Policy Committee to hold back from raising bank rate further next week, which already had been bolstered by the collapse of two U.S. banks over the weekend. Most importantly of all, wage growth has slowed substantially.”

PA Media contributed to this report.