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Job vacancies decrease, driven by smaller businesses, but labour supply challenges still loom

17 August 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 a small decrease in the employment rate, which is perhaps not surprising given the rising inflation and the cost of living crisis.  However, the number of employees in full time employment has risen, while numbers of part time workers has reduced.  The unemployment rate for April to June 2022 has increased slightly with the numbers of people unemployed for between 6 and 12 months increasing for the first time since February to April 2021, although the numbers of people unemployed for over 12 months has reduced.  

"There are indications that, as suggested last month, the labour market is starting to slow with the number of job vacancies in May to July falling by nearly 20,000.  This is the first fall in vacancy numbers since June to August 2020 although the figures are still almost 1,000,000 higher than the all-time low experienced in April to June 2020 at the height of the pandemic.   The statistics suggest that smaller businesses are changing their recruitment practices more quickly than larger companies, with the decrease in vacancies being driven largely by companies with fewer than 50 employees.  However, the number of redundancies remain low at 1.9 per thousand employees.

"The 'Great Resignation' remains an issue for employers.  Although movement from job to job has fallen slightly, it remains high and the data suggests that this movement is driven largely by resignations and job changes by choice, rather than dismissals.  Consequently, the pressure remains on employers to find new and innovative ways to present themselves as the employer of choice to prevent their talent leaving.  Good benefit packages, flexible working, a supportive culture and development opportunities within the business continue to be 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:

"The latest survey of Scotland's labour force indicates that there has been little change over the quarter April to June 2022 compared with the previous quarter (January to March 2022) and pre-pandemic (December 2019 to February 2022). 

"Unemployment rates have decreased by 0.5% against pre-pandemic levels and have remained at 3.2% over the quarter and is below the UK rate of 3.8%. The estimated unemployment rate (16+) in Scotland is 75.4%, an increase of 0.1% against pre-pandemic levels but down 0.1% over the quarter. Scotland's employment rate was also slightly below the UK rate of 75.5%. The estimated rate of economic inactivity in Scotland was 22%, an increase of 0.4% against pre-pandemic levels and 0.1% over the quarter. IT is also ).6% higher that the UK rate of 21.4%. 

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

Commenting on the Northern Ireland Labour Market Report, Rachel Richardson, Employment Law Director at the Belfast office of DWF said:

"As the cost of living crisis deepens, it is reassuring to see that there were the highest levels of payrolled employees on record in July.  The areas which saw the highest growth in employee numbers were: information and communication and the arts, entertainment and recreation sectors, presumably as a consequence of those sectors recovering after the effects of the pandemic. However, the LMR also showed a decrease in unemployment rates and when compared to pre-pandemic levels, the total number of hours worked in April-June 2022 was 4.5% below, whilst the employment rate was 2.7pps below pre-pandemic levels.
 
"Looking at September and beyond, workforce supply and retention will probably continue to be a serious issue for many employers in Northern Ireland. With wages falling at their sharpest rates on record and employees facing the energy bills crisis, as well as rising inflation, employers will need to be willing to pay their employees more. They will also need to consider new and innovative ways of attracting staff into their businesses, including offering enhanced benefits and flexible working options. In my view, autumn 2022 may well be a challenging time for both employees and employers in Northern Ireland."

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