Labour Market Update – June 2023


Labour Market Update – June 2023

Labour Market Overview

The latest ONS Labour Market Overview reported:

  • 3.8% or 1.3 million people were unemployed; 21.9% have been unemployed for more than 12 months and a 0.1% increase on previous quarter
  • The employment rate increased slightly to 76%
  • Although reduced from last quarter, economic inactivity is still 348,000 higher than pre-pandemic levels at a total of 8.71 million people
  • A record 592,000 people are classified as long-term sick but want to have a job
  • Vacancies fell again to 1.05 million, the 11th consecutive quarterly fall. The number of unemployed people per vacancy was 1.2
  • Record level of payrolled employees at 30 million, up 460,000 over the 12-month period and up slightly on the last quarter
  • Growth in total pay was 6.5% and regular pay was 7.2% although they fell in real terms by 2% and 1.3% respectively
  • 5.97 million people were claiming Universal Credit, down 80,800 from previous month, of which 1.42 million were searching for work


Key findings from ALP’s Labour Supply Chain Survey for May 2023 include:

  • Although easing, labour shortages are still severe with 30% of employers not expecting to have the workers they need in 2023
  • Improvements in labour availability may be due to decreased client demand, with two thirds of labour providers supplying fewer workers
  • Half of businesses say they have had to rationalise or reduce their output, automate to reduce reliance on skills and labour or move part of their growing or production overseas. According to the latest KPMG and REC UK Report on Jobs survey, lingering uncertainty around the economic outlook and delayed decision making has impacted on staff placements with permanent staff appointments falling for the 8th month in a row and at the quickest rate since January 2021. Temporary billings have risen only slightly. The overall availability of labour improved for the third month running and the sharpest increase in two and a half years. People Management reported on a survey by the British Chamber of Commerce that 82% of companies experienced recruiting difficulties in Q4 2022, up from 73% in Q3. They have identified three primary factors driving the UK labour shortage in 2023:
  • A shift in labour supply and demand post-pandemic
  • A rise in early retirements
  • The impact of Brexit on labour supply


Cost of Living Crisis

The CIPD latest Spring 2023 Labour Market Outlook reported that the UK looks to have narrowly avoided a recession, but the macroeconomic picture isn’t particularly bright. Employees are feeling the pinch of real wage losses, yet few employers have dedicated financial wellbeing policies to support them. Key findings:

  • Net employment balance remains stable
  • Hard to fill vacancies persist
  • Employers focus on upskilling staff and raising wages
  • Public Sector pay at new peak

Few employers have a financial wellbeing policy The Financial Times reported that wage growth accelerated in the UK in May even as the job market cooled. The median wage rate in UK job adverts was 7.2% higher than the previous year. The data re-enforces fears in the Bank of England that pay pressures are now amplifying the UK’s inflation problem.

Immigration Update Total long-term immigration was estimated at around 1.2 million in 2022 (up from 942,000 in 2021), and emigration was 557,000, which means migration continues to add to the population with net migration at 606,000.

The increase in net migration is driven by non-EU nationals (925,000) accounting for 80% of total immigration, and an increase of 287,000 on 2021. In contrast immigration of EU nationals was down by 45,000 at 151,000 for 2022. This represented just 13% of total immigration in 2022, significantly down from the pre-pandemic levels of 52% and 42% in 2018 and 2019 respectively. New government restrictions to student visa routes will substantially cut net migration by restricting the ability of international students to bring family members on all but post-graduate research routes. This will ban people from using a student visa as a backdoor route into the UK. According to the ONS the number of dependants of overseas students has increased by 750% since 2019, to 136,000

Initial indicators are that the potential additional 10,000 Seasonal Workers’ Scheme visas for 2023 will not be required. Defra is currently seeking evidence from growers and scheme operators, and has signalled that it believes that the current number of operators are sufficient if the visa quota remains at 45,000. This will mean that Defra will not conduct an RFI later in the year for a new scheme operator, as previously indicated. The Independent Review into Labour Shortages in the Food Supply Chain is considering the challenges facing food and farming businesses to recruit and retain the labour they require and will provide recommendations for industry and Government to consider. The House of Lords Horticultural Sector Committee is also considering challenges, opportunities and risks facing the horticultural sector.



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