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Employment has fallen sharply in the UK compared to other major economies over the past year, as concerns about weak growth and rising wage bills led some companies to cut staff.
UK job advertisements were 13 per cent lower than their pre-pandemic level and 23 per cent lower than last year, according to figures published by job search website Indeed on Tuesday – a bigger reduction than in any of the other markets it covers, including… That is the United States, France, Germany, Canada and Australia.
Jack Kennedy, chief economist at Indeed, said this was because the UK faced “stronger employment headwinds” even before the government’s recent announcements of employment tax increases – with “greater cost-of-living pressure, political uncertainty, and weaker business sentiment”. .
The decline in employment has been deeper and longer-lasting in the technology and other professional sectors, with UK job openings in software development, information design, media and communications falling by more than 40 per cent on 2019 levels.
But Kennedy said the slowdown in white-collar hiring was common across all countries tracked by Indeed, with employers finding it easier to attract candidates for roles that can be performed remotely rather than filling lower-paying vacancies for on-site work.
The UK is unusual in that it is also seeing a sharp decline in employment in low-paid sectors where other countries still have high vacancy rates – with vacancies a third lower than their 2019 level in 2019. Hospitality and tourismand fell by more than 10 percent in retail trade compared to the same year.
These concerns will now be exacerbated by rising employers' National Insurance contributions, which will be hit hard in low-paid sectors where a high proportion of employees work part-time.
Gauging the state of the UK labor market is more difficult than usual at present, due to the ongoing situation Lack of reliable official data Which usually forms the basis for making monetary and financial decisions.
Policymakers at the Bank of England see the jobs market as relatively tight overall, despite the difficult conditions Slowdown in hiringThere is no evidence yet of significant job losses.
UK unemployment remains relatively low according to the Office for National Statistics' key measure at 4.3 per cent, and separate figures, based on tax records, suggest that paid employment has been flat rather than falling in recent months.
Meanwhile, the nationwide wage tracking index, which measures growth in advertised pay rates for new employees, shows that wage growth in the UK remains much higher than in other countries, at 6.7 per cent as of October – which is A concern for the Bank of England and a conundrum, given the reluctance of employers to hire new employees.
One possible explanation is that employers who struggled to hire when coronavirus lockdowns were lifted are still concerned about losing employees they may not be able to replace.
“Businesses are reluctant to hire, but they don’t want to lose the people they have,” said Andrew Goodwin, chief UK economist at consultancy Oxford Economics. “People who are employed are likely to stay in a job. People who do not have a job will find it very difficult to enter the labor market.
Michael Stoll, managing director at recruitment firm ManpowerGroup UK, said the prolonged “employment stagnation”, coupled with low unemployment and strong wage growth, was unprecedented.
He said companies now see reduced hiring as the “quickest path” to limiting the damage from higher employment taxes next year, and are also starting to see the potential for artificial intelligence to reduce the need for employees.
But the long-term slowdown in white-collar hiring was also partly because employees became more concerned about the economic outlook, and less willing to take the risks of jumping ship.
“Workers are holding on tight. . . . (In previous recessions) the last ones in were the first out,” Stoll said. “No one wants to be the last one hired.”
Data visualization by Amy Burritt.
