Labour Market Statistics, September 2022

Today’s figures are overall very poor, with employment down, ‘economic inactivity’ up (the measure of those out of work and not looking and/ or available for work) and real-terms pay falling. Of most concern today, economic inactivity due to long-term ill health saw its largest quarterly rise since comparable records began in 1992, reaching its highest ever level (2.46 million).

These falls in employment and participation are again coming in spite of unemployment plumbing new depths – now at its lowest since 1974 – and continued strong labour demand, leading to the tightest labour market in our lifetimes.  Employers simply cannot find the workers that they need to fill their jobs.  This in turn does appear to be feeding through into higher nominal pay, which is up by 5.4% year-on-year with private sector pay higher still (on average 6.4%). This at least means that the costs of living crisis is not as bad as it could have been for private sector workers, although in the public sector pay growth is anaemic at just 2.4% – well below its long run trend.

There are also some potential early signs that labour demand may be starting to weaken in the private sector as the combined effect of rising interest rates and higher inflation take their toll, although public sector vacancies continue to rise – likely due to their difficulties in recruiting and retaining staff without significant investment in pay and workforces.

All told, these figures reiterate that we need to do far more – public policy and employers – to help those out of work and who want a job to prepare for, find and stay in work.  In particular this should mean broadening access to employment services – whether on any benefit or none; investing more in specialist support, drawing on the public, private and voluntary sectors; and working far better with employers on job design, recruitment, training and workplace support.