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DWF employment law experts examine latest labour market data

18 April 2023

DWF's employment law experts take a look at the latest labour market data for the UK, Scotland and Northern Ireland.

UK wide data

The latest employment ONS figures for the period December 2022 to February 2023 show a resilient labour market despite the challenging economic climate.  The highlights for the period show a UK employment rate of 75.8%, 0.2% higher than the previous quarter.  The UK unemployment rate for the same period was estimated at 3.8%, an increase of 0.1% from the previous quarter.  The UK economic inactivity rate decreased by 0.4% point over the quarter, to 21.1%.  According to the latest release the increase in employment over the quarter was driven by part-time employees and self-employed workers.  The figures are captured from a period which included increased economic activity due to both the World Cup and the run up to Christmas.  
Between January 2023 and March 2023 the estimated number of vacancies fell by 47,000 on the quarter to 1,105,000.  This was the ninth consecutive period during which the number of vacancies fell.  It is perhaps unsurprising that employers are taking a cautious approach to recruitment in the current economic environment.   According to the International Monetary Fund the UK is set to be one of the worst performing major economies in the world this year.  With such economic uncertainty many employers will be looking to reduce overheads.  
The latest figures also show that pay is struggling to keep up with rising prices.  During the period December 2022 to February 2023 growth in regular pay (excluding bonuses) was 6.6% among employees.  In real terms, taking into account inflation, growth in regular pay fell by 2.3%.  At a time when retention of core talent presents a real challenge and pay increases are not always an option, employers are looking for innovative ways to retain and motivate staff – from increased flexibility to improved benefits schemes.  
Commenting on the UK data, Joanne Frew, Global Head of Employment and Pensions at DWF, said: "With industrial unrest likely to continue throughout 2023, it is worth noting that 348,000 working days were lost due to labour disputes in February 2023, an increase of 210,000 from January 2023.  Workplace culture and employee engagement is of paramount importance as employers and employees navigate the next few months." 

Scotland data

The latest labour market figures for Scotland remain relatively robust.  The headline figures for the period between December 2022 and February 2023 show an estimated employment rate of 75.7%, a decrease of 0.4% over the quarter.  By way of comparison, Scotland's estimated employment rate was slightly below the UK rate of 75.8%.  Scotland's unemployment rate was 3%, 0.3% lower than the previous quarter.  Scotland's unemployment rate was below the UK rate of 3.8%.  It is encouraging to note that Scotland's unemployment rate was the lowest since the series began in 1992 demonstrating real resilience to the economic difficulties facing the market.   

Commenting on the Scottish figures, Ann Frances Cooney, partner leading the Scottish employment law practice, added: "With the economic challenges looking set to continue we can expect to see some employers seeking to cut costs through restructuring.  The employment rate in Scotland may face further challenges as employers seek to combat soaring prices with a reduction in staff overheads. 

"Labour supply has been a continuous problem for employers in the transport sector which tends to be heavily unionised across both public and private sector and not immune to industrial action.  With the latest labour market figures indicating that employers are struggling to increase pay in line with inflation, employers in the transport sector may see a real opportunity to recruit.  Against the backdrop of economic uncertainty lucrative pay offers are likely to be more appealing than ever before.  This tactic of course depends on the financial means of the recruiting employer.   

"With the cost of living rising and real pay struggling to meet the increase we may see more industrial unrest in Scotland.  It is crucial for employers to focus on fostering a positive workplace culture.  Creating a foundation of trust and a sense of "we are in it together" through transparent employee engagement will inevitably place employers in a stronger position to ride out the economic uncertainty."

Northern Ireland data

The latest labour market figures in Northern Ireland are encouraging. There has been a significant increase in employment between December 2022 and February 2023 to 71.9% and a decrease in the economic inactivity rate in the same period to 26.2%.  The unemployment rate in NI has decreased between December 2022 and February 2023 to 2.4%. There was an increase in pay rolled employees in March and median earnings for the month also increased. However in contrast with this, the seasonally adjusted claimant count increased by 2.3% and indeed, the March claimant count remains 21.2% higher than the pre-pandemic count in March 2020. There were 150 redundancies confirmed to the Department in March, this took the rolling twelve month total number to 1070, however this was 42.2% less than the previous twelve months. There were 100 proposed redundancies which was an increase of 2.8% compared to the previous twelve month period.

Responding to the Northern Irish figures, Rachel Richardson, director and head of the employment team in Belfast, said: "Despite the promising statistics, with the cost of living crisis continuing to bite, we may see yet more industrial unrest in NI and a continuation of the strikes which have been occurring across different sectors. Employers will need to focus on fostering a positive workplace culture with their staff. Of course, not all employers will be able to offer pay increases, so they will need to look at other ways of retaining staff, such as offering increased flexibility and improving benefit schemes."

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