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DWF's employment law experts examine latest labour market data

18 January 2023

DWF's employment law experts, Joanne Frew, Ann Frances Cooney and Marie-Claire Logue, 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 between September and November 2022 show a steady labour market despite ongoing economic pressures.  The highlights for the period show a UK employment rate of 75.6%, largely unchanged over the quarter.  The UK unemployment rate was estimated at 3.7%, 0.2% higher than the previous quarter. The UK economic inactivity rate was estimated at 21.5%, a 0.1% decrease from the previous three month period.
Reports are showing that pay is rising at a significant pace but that this is still not enough to counteract the cost of living crisis.  The ONS figures show that growth in average total pay (including bonuses) and regular pay (excluding bonuses) among employees was 6.4% for September to November 2022, the strongest growth rate seen outside the Covid pandemic period.  However, soaring prices mean that employees are not feeling the benefit of pay increases.  The Bank of England has previously warned that increased wages can lead to inflation becoming embedded.  Employers are in the precarious position of juggling demands for increased pay, a competitive labour market and rising business costs.

Commenting on the UK data, Joanne Frew, Global Head of Employment and Pensions at DWF, said: "The UK economy has certainly faced a challenging period, however recent reports are showing some sign of recovery.  In November 2022 the UK economy unexpectedly grew by 0.1%, reportedly boosted by increased revenue from the World Cup.  Although the growth offers some comfort the labour market is likely to face a continued turbulent period over the next few months."

Scotland data

The latest labour market figures for Scotland remain relatively steady despite the current economic climate.  The headline figures for the period between September and November 2022 show an estimated employment rate of 76.1%, an increase of 0.3% over the quarter.  By way of comparison, Scotland's estimated employment rate was above the UK rate of 75.6%.  Scotland's unemployment rate was 3.3%, unchanged over the quarter.  Scotland's unemployment rate was below the UK rate of 3.7%.  Against the backdrop of the cost of living crisis the latest figures show real resilience in the labour market in Scotland.  

Commenting on the Scottish figures, Ann Frances Cooney, partner leading the Scottish employment law practice at DWF, added: "Although the figures reported show a robust labour market, we are likely to see further challenges ahead as Scotland continues to battle against recession.  With the cost of living soaring, many employees are seeking pay increases which employers simply cannot afford to pay.  Organisations are in the precarious position of juggling demands for increased pay, a competitive labour market and rising business costs.

"Despite the ongoing resilience of Scotland's labour market, it is likely that economic difficulties will lead to some job losses over the coming months.  Employers will be focusing on retaining core talent to help the business ride the storm and reducing overheads where possible." 

Northern Ireland data

The most recent labour market release shows some positives, with unemployment and economic inactivity showing improvement over the year. A closer look at this month's figures showed that payrolled employee numbers increased by 0.2% over the month and are 2.0% above the figure recorded in December 2021. In addition, the report showed that payrolled earnings also increased over the month, by 0.3% and are 6.3% above the figure recorded in December 2021. 

In terms of redundancies, there were 80 redundancies confirmed to the Department in December 2022, taking the rolling twelve-month total to 730. This is the lowest twelve-month total in the time series and, following the previous two months, is the third consecutive twelve-month total under 1,000.
A statistically significant increase from the results have shown a growth in the employment rate to 71.3% over the year to September-November 2022, as well as a statistically significant decrease in the economic inactivity rate to 26.6% over the year to September-November 2022. Despite these changes, the employment rate remains 1.2pps below the pre-. pandemic level recorded in December-February 2020. 

Earnings from the HMRC PAYE indicated that NI employees had a median monthly pay of £2,021 in December 2022, an increase of £7 (0.3%) over the month and an increase of £119 (6.3%) over the year. However, Northern Ireland has seen the lowest increase in earnings of all the UK regions since March 2020, with earnings in NI increasing by 15.9%, 3.0pps lower than the UK, which increased by 18.9%.

Responding to the figures, Marie-Claire Logue, Associate in the Employment team in Belfast commented "Despite the challenging economic climate, the NI labour market figures show that employee earnings and numbers have increased over the month, albeit remaining the lowest within the UK, with NI also seeing the lowest monthly redundancies of the year. However, further challenges remain ahead, with upcoming strike action and the ongoing cost of living crisis putting pay, and contractual terms, in the forefront of employee's minds. Employers should continue to create a supportive workplace structure with clear communication in place with how they are planning to overcome and manage these issues"

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