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Good benefits and flexible working can help businesses attract and retain staff, as key sectors struggle

21 July 2022

Our employment experts across the UK comment on the latest labour market figures.

Joanne Frew, Global Deputy Head of Employment, DWF, comments on the UK Labour Market figures. She said:

"The latest ONS labour market figures show that the UK job market remains steady despite the rising inflation and the cost of living crisis. The highlights for the period between March and May 2022 show an employment rate of 75.6%, 0.2% higher than the previous quarter with redundancies at a record low of 1.8 per thousand employees. The UK unemployment rate was estimated at 3.8%, 0.1% lower than the previous quarter and 0.2% below pre-pandemic levels. The numbers of employees in both full time and part time employment increased whilst full-time self-employment is falling, which could suggest workers are seeking more job security in the current uncertain world. 

"The labour supply shortages continue with the number of job vacancies in April to June 2022 reaching to a new record of 1,300,000, however, the statistics suggest the growth in vacancy numbers is beginning to slow. The pressure remains on employers to find new and innovative ways to present themselves as the employer of choice.  As pay increases across the board fall behind the rate inflation, with average pay (excluding bonuses) increasing by 4.3% against an inflationary high of 9.1% in May 2022, employers need to offer something else to attract the best talent to their roles. There are however fears that a two-tier workforce may be being created, with in-demand skilled jobs commanding higher pay rises to fill the vacancies while lower skilled roles fall further behind the rate of inflation. Good benefit packages, flexible working, a supportive culture and development opportunities within the business are going to be ever more important to both attract and retain staff."

Commenting on the Scottish Labour Market figures, Ann Frances Cooney, employment law partner at DWF leading the Scottish employment law practice said:

"As we look ahead, labour supply is likely to continue to be a concern for many employers in Scotland.  

"With retention and recruitment difficulties continuing, employers are having to think of new and innovative ways to attract the best talent, as well as the more traditional route of increased pay. With the cost of living crisis employees quite simply need more money to live, making a competitive pay package crucial.  

"The transport sector has been particularly hard hit by labour supply issues having already faced a challenging period during the pandemic.  

"Staff shortages are particularly apparent in Scottish airports with passengers experiencing long queues at check-in and security as well as delays with baggage handling and although the rail workers' dispute appears to have been resolved, the shortage in labour supply continues to impact attendance at concerts and festivals. 

"With no clear solution in sight, the challenges look set to continue into the Autumn."

The latest data indicates that, over the quarter March to May 2022, unemployment rates have increased slightly. The estimated unemployment rate (16+) in Scotland is 3.5%, down 0.2% since the quarter preceding the pandemic (December 2019-February 2020) but up 0.1% over the quarter. Scotland's employment rate was 74.9% up 0.6% over the quarter.

Both Scotland's unemployment and employment rates are both below the UK rates of 3.8% and 75.9%. 

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