Labour Market Update – August 2023


Labour Market Update – August 2023

Labour Market Overview

As a leading provider of human resource solutions across the region we wanted to share with you latest trends and insight for the month of August.

The latest ONS Labour Market Overview reported:

  • 4.2% or 1.44 million people were unemployed; an increase on the previous quarter, driven by people unemployed for up to 6 months.
  • Employment rate decreased slightly to 75.7%.
  • 8.69 million people are economically inactive, 38,000 lower than the last quarter largely driven by those looking after family or home.
  • Those inactive because of long-term sickness increased to a record high.
  • Flow estimates show that there was a large net movement from economic inactivity into unemployment.
  • Vacancies fell again to 1.02 million, the 13th consecutive quarterly fall.
  • Record level of pay rolled employees at 30.2 million, up 97,000 on the last quarter.
  • Growth in total pay was 8.2% and regular pay was 7.8% and they rose in real terms by 0.5% and 0.1% respectively.

The latest REC and KPMG Report on Jobs found hiring activity across the UK continued to be dampened by a weak economic outlook and reduced confidence among businesses. Permanent placements contracted at the quickest rate for just over three years, while temp billings growth weakened notably from June.
However, the REC Labour Market Tracker reported that the number of active postings in the week of 3rd – 9th July 2023 was 2.24million, 53.3% higher than the same time last year. There were 193,300 new job postings, 8.5% higher than the year before so year on year comparisons continue to be positive.

The REC JobsOutlook shows that employers are feeling more positive about their own businesses and slightly better about the economy. It also reports that the overall availability of staff rose at a substantial pace amid the slowdown in recruitment and reports of redundancies. The latest upturn in total labour supply was the steepest recorded since October 2009 (when excluding the pandemic period). While there were signs of pay pressures moderating again in July, permanent salaries continued to rise at a sharp pace overall. Total vacancy growth meanwhile slowed further, hitting a 29-month low in July.

Employers offering temporary work this summer are set to see a surge in applications according to a survey by Indeed Flex. HR Review also reported that three in five Britons are planning on a summer job to top up their income, with helping to pay for a holiday the 2nd main reason for the upturn in likely applications. The most sought-after sectors are retail, followed by hospitality and warehouse roles.

People Management reported on a survey conducted by Thinks Insight and analysed by the TUC, which found that 55% of UK workers feel work is becoming more intense and demanding with staff shortages and technology to blame. Key findings include:

  • 61% of workers said they feel exhausted at the end of most working days.
  • 40% say they are now required to do more work in the same time.
  • 38% say they feel stressed at work.

The Living Wage Foundation’s latest research report Precarious pay and uncertain hours: insecure work in the UK Labour Market looks at the impact of Covid-19 and the cost of living crisis on work security. It found that 6.1m workers in the UK are in insecure work, with 3.4m being in low paid insecure work. This is a slight decrease from 2021. The report identifies these impacts of insecure work:

  • 59% of workers whose hours vary have been called into work with less than a week’s notice. 13% of those with varying hours have been given less than 24 hours’ notice.
  • A quarter of workers with varying hours have had shifts cancelled by their employer unexpectedly.
  • When shifts are cancelled, 90% of workers do not receive full payment, with 26% not receiving anything.
  • 27% of workers with varying hours have had to pay higher travel costs due to being called into work on short notice, while 17% have had to pay higher childcare costs.

Legislation update

On 14th July 2023 the decision on the judicial review action by UNISON and others vs Secretary of State for Business, Energy, and Industrial Strategy was made. The High Court has declared that the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022 (2022 Regulations), which allowed employers to hire agency workers to cover staffing gaps caused by strike action, are unlawful and will be quashed (invalidated) with effect from 10 August 2023. Employers who currently use agency workers to cover striking workers (or were planning to do so in future) should now urgently review those arrangements to ensure that they end before 10 August 2023. From that date, the ban on engaging agency workers to cover staffing gaps caused by strike action contained in regulation 7 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (2003 Regulations) will once again apply.

Immigration Update

There have been significant changes to applications to the EU Settlement Scheme. It has been discovered that applicants with no right to the EU Settlement Scheme were able to make an application and gain a Certificate of Application (CoA) which gives a statutory excuse for 6 months when checked through the Employer Checking Service. When the application is refused, or when the 6 months runs out, applicants were simply able to make another application and continue working in the UK.

On 9th August 2023, this ‘loophole’ closed.  Late applications to the EU Settlement Scheme (EUSS) are now judged first on the validity of their reasons for a late application, before going on to be assessed in terms of their eligibility and suitability requirements. The change means that a CoA will only be issued when the grounds for making a late application have been approved.  Updated Caseworker Guidance provides more details and examples of what constitutes reasonable grounds for a late application

This will have a significant impact on many labour providers’ current and future workforce as they may have large numbers of workers who are EUSS applicants waiting for resolution and it is likely that a significant number of them will not have their Positive Verification Notice (PVN) renewed the next time a check is made.


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