Labour Market Update – January 2024


Labour Market Update – January 2024

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 January.

The latest ONS Labour Market Overview continues to be the adjusted experimental data and reported:

  • UK unemployment rate was largely unchanged at 4.2%, 1.46 million people unemployed
  • Unemployment amongst young people remains high (aged 16-17 = 19% / aged 18-24 = 12%)
  • Employment rate was largely unchanged at 75.8%
  • UK economic inactivity rate was largely unchanged on the quarter at 20.8%
  • 8.67 million people are economically, an increase of 63,000 on the last quarter
  • Economically inactivity is still 231,000 higher than pre-pandemic levels
  • Vacancies fell again to 934,000, the 18th consecutive period fall, down 226,000 from a year ago, but higher than pre-covid levels
  • Payrolled employees remained similar to the previous quarter at around 30.2 million, 1.19 million higher than pre-pandemic levels
  • Annual growth in regular pay without bonus increased by 6.6%, and with bonus by 6.5%. Adjusted for inflation, annual growth in regular pay was 1.4% and total pay was 1.3%
  • 6.35 million people were claiming Universal Credit in December. This has increased from 5.7 million in July 2022 and is more than twice as high as pre-pandemic levels. There are currently 1.43 million people searching for work
  • 69,000 working days were lost because of labour disputes in November, mainly in transport, storage and communication industries

The ONS has published further analysis from the Census 2021 which has found unemployment varied greatly by disability status and ethnicity, with estimated unemployment rates for some groups as low as 2.9%, while for others it was up to 17.2%. Disabled adults are more likely to be unemployed than non-disabled adults. However, unemployment rates for disabled and non-disabled groups varied greatly when other factors were accounted for e.g. ethnicity.

The latest Impact Report from the Learning and Work Institute says that 3 million out of work people want a job, but the necessary support is not widely available.

The latest KPMG and REC UK Report on Jobs: North of England reported that recruiters based in the North of England signalled a decrease in the number of people placed in permanent roles for the seventh consecutive month in January. Having gathered momentum from December, the rate of decline was strong and the quickest in five months. January survey data pointed to a third successive monthly rise in temporary billings across the North of England. The respective seasonally adjusted index rose to a ten-month high, for the third month in a row, the North of England posted the quickest rise in temp billings of all four monitored English regions. After declining at the end of 2023, January saw candidate availability for permanent roles increase rapidly across the North of England, temporary staff supply also rose during the first month of the year. However, the rate of increase was the softest seen over the last 11 month period and only marginal.

The supply of candidates meanwhile continued to rise sharply, despite the rate of expansion easing from November’s near three-year record. Recruiters often mentioned that redundancies and lower levels of hiring activity had increased the pool of available candidates for both permanent and temporary roles. Nevertheless, competition for suitably skilled workers remained a key factor pushing up rates of starting pay again in December.

The Resolution Foundation Labour Market Outlook for Quarter 4 2023 reported that the tightness of the labour market is an important driver of wage growth. Since the post-Covid-19 reopening in 2021, a collective rush to recruit and a smaller workforce have combined to put worker shortages in the spotlight. Even as the post-pandemic pandemonium has eased, vacancies remain higher than pre-pandemic while unemployment is close to record lows.

People Management reported on research into the challenges working parents face in balancing their jobs and home life. Work, Me and the Baby published a report with Ashridge Business School – The priority actions for boards to drive equal opportunities for working parents. The research found that while the government is responsible for some of the barriers that stand in the way of change – such as childcare and its respective costs – many barriers are entirely within organisations’ control. HR managers reported that complex policies, inflexible working models, ill-equipped line managers, outdated mindsets and gender stereotypes are all obstacles.

The Global Workplace Report 2024 analysed data from more than 300,000 workers across the UK, US, Australia, New Zealand and Ireland, providing insight on how happy people are at work, and what employers can do to support their workforce. Over half of those surveyed, revealed they were looking to integrate AI into their HR and recruitment processes. Amongst the findings, 7/10 employers agreed there has been a significant flight risk amongst its employees. 7/10 employers also believed there is significant gap between what employees expect to get paid and what they can offer as an employer.

Immigration Update

The Government has published a research briefing on the Changes to legal migration rules for family and work visas in 2024. This provides answers to some frequently asked questions about the immigration changes announced in December 2023, including to the minimum income to sponsor a spouse/partner visa and information on when the changes will happen.

The Home Office has published a Factsheet on Net Migration Measures for those currently in the UK on routes that will be subject to change:

  • Carers and senior carers – these changes will be introduced as soon as possible in 2024
  • Salary thresholds will be introduced via Immigration Rules with implementation in April 2024
  • Immigration Salary List – the government will commission the MAC in January 2024
  • Family migration minimum income transition arrangements
  • Graduate route review – in January 2024, the government will ask the MAC to review this route

Defra is currently conducting an inquiry into Fairness in the food supply chain which as well as examining the relationship between food production costs, farmgate prices and retail prices is also looking at “labour shortages in the food supply chain, concerns regarding the exploitation of workers under the seasonal worker scheme, and the pay and conditions of food workers.”

The Home Office has published the updated Code of Practice for the Right to Work Scheme. This introduces the new higher civil penalties, starting at £45,000 for employing a worker without the right to work in the UK. The Code comes into force on 13th February 2024.


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