UK wide data
The latest labour market figures from the ONS show continued resilience over the winter months of November 2023 to January 2024. The UK employment rate was estimated at 75%, below estimates of a year ago and down in the latest quarter. The UK unemployment rate was estimated at 3.9%, above estimates of a year ago but largely unchanged on the latest quarter. The UK economic inactivity rate was 21.8%, above estimates of a year ago and increased in the latest quarter – showing one fifth of adults in the UK are not in work or seeking employment.In the period December 2023 to February 2024, the estimated number of vacancies in the UK fell by 43,000 on the quarter to 908,000. Vacancies fell on the quarter for the 20th consecutive time indicating that the job market is stalling to some extent. However, vacancies are still above pre-pandemic levels.
Annual growth in earnings in Great Britain was 5.6% in November 2023 to January 2024, and annual growth in employees' average regular earnings was 6.1%. Annual growth in real terms for total pay rose on the year by 1.4% in the period November 2023 to January 2024, and for regular pay rose on the year by 1.8%.
The latest budget reduced Class 1 employee National Insurance contributions, with a revised rate of 8%. According to the government the rate reduction will amount to an annual saving of £900 for the average worker. Although this reduction may ease some of the pressure on employers to increase pay in line with rising costs, there is still some way to go to bridge the gap. Whilst pay is a primary factor, employers should not underestimate the significance of workplace culture and employee engagement as key strategies when competing for talent.
With a general election on the horizon we can expect further changes in the job market over the course of the year.
Scotland data
The Scottish labour market figures for the period November 2023 to January 2024 indicate that over the quarter the unemployment rate decreased, while the employment rate increased and the inactivity rate decreased – a continued positive trajectory despite the challenging economic climate.
The highlights for the period show the unemployment rate in Scotland was 4.1%, down 0.3% over the quarter. By way of comparison Scotland's unemployment rate was above the UK rate of 3.9%. The employment rate in Scotland was 74.2%, an increase of 0.4% over the quarter. Scotland's employment rate was below the UK rate of 75%. The economic inactivity rate in Scotland was 22.5%, down 0.2% over the quarter. Scotland's economic inactivity rate was above the UK rate of 21.8%. Against a backdrop of a difficult economic climate the latest figures show continued resilience in the Scottish labour market.
Early seasonally adjusted estimates for February 2024 from HMRC Pay as You Earn Real Time Information indicate that median monthly pay for payrolled employees in Scotland was £2,341, an increase of 3.6% compared with February 2023. Despite the increase however, for many it is not enough to match rising costs. The battle for talent continues with employers struggling to meet the demands for increased pay. Employers should not underestimate the importance of workplace culture when attracting and retaining talent. Although pay is a significant factor, diversity and inclusion, flexibility and creating a genuinely great place to work can all help employers retain a competitive edge in the labour market.
With a general election around the corner we will have to wait and see what policies are drawn up which will undoubtedly impact the labour market.
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