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Cost of living and soaring inflation will effect labour market

17 May 2022

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

Kate Meadowcroft, Employment Partner at legal business, DWF, comments on the UK Labour Market figures. She said: 

"The latest ONS labour market figures demonstrate a steady continued recovery.  The highlights for the period between January 2022 and March 2022 show an employment rate of 75.7%, 0.1% higher than the previous quarter.  The UK unemployment rate was estimated at 3.7%, an encouraging 0.3% lower than the previous quarter.  Although the figures reported represent a period when we were still subject to a number of restrictions, it is clear a degree of confidence was building following announcements made in January 2022 that restrictions would ease.  

"Undoubtedly the cost of living crisis and soaring inflation will have a knock on effect on the labour market.  ONS figures have previously shown that although wages have risen, once you consider inflation pay is actually falling.  Employees will be seeking out the most attractive rewards packages in order to combat the financial repercussions of the turbulent economy.  

"We watch with hopeful anticipation that as we learn to live alongside Covid-19 the economy will be given sufficient opportunity to recover and in turn the labour market will continue to improve."    

Commenting on the Scottish Labour Market figures, Ann Frances Cooney, Employment Partner, said: 

"The latest labour market figures for Scotland show continued steady recovery.  The headline figures for the period between January 2022 and March 2022 show an estimated employment rate of 75.6%, an increase of 1.4% over the quarter.  By way of comparison Scotland's employment rate was slightly below the UK rate of 75.7%.  Scotland's estimated unemployment rate was 3.2%, a reduction of 0.9% over the quarter.  Scotland's unemployment rate was below the UK rate of 3.7%.  Although the figures reported represent a period when we were still subject to a number of restrictions, the Scottish labour market has yet again demonstrated its resilience during a challenging quarter.  

"Undoubtedly, the cost of living crisis and soaring inflation will have a knock on effect on the labour market.  ONS figures have previously shown that although wages have risen, once you consider inflation, pay is actually falling.  Employers grappling with the so-called Great Resignation are already facing challenges to recruit and retain talent and employees will be seeking out the most attractive rewards packages in order to combat the financial repercussions of the turbulent economy. 

"We watch with hopeful anticipation that as we learn to live alongside Covid-19 without restrictions, the economy will be given sufficient opportunity to recover and in turn the labour market will continue to improve."  

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