Official statistics showed the employment rate in the United Kingdom (UK) remained at record high from May to July, but economists are worried that there are early signs the country’s jobs boom could be cooling down.
The UK employment rate remained unchanged at 76.1 percent with the unemployment rate at 3.8 percent in the three months to July, Office for National Statistics (ONS) data revealed on Tuesday. It said the UK employment increased by 31,000 in this period, but at a lower rate than in recent months.
“For a long time, businesses have been eager to expand their workforce despite difficult economic conditions. With the supply of available workers shrinking and uncertainty lingering, firms are now beginning to dial down their recruitment ambitions,” said Tej Parikh, chief economist at the Institute of Directors, a business organization for company leaders.
The ONS said the number of vacancies in the three months to August stood at 812,000, a decline of 23,000 on the previous quarter. It is unknown if the fall in vacancies is a result of a freeze on recruiting or of an increase in available workers.
“Vacancies are likely to continue falling. It’s becoming harder for business leaders to do any meaningful workforce planning, let alone find the talent that they need. High costs and an unclear view of future revenue have also led some to hold off on new hires,” Parikh said.
A recent report by accounting firm KPMG and the Recruitment & Employment Confederation (REC) indicated that political and economic uncertainty is dampening recruitment activity, highlighting that permanent staff appointments fell for the fifth consecutive month in July and that skill shortages continue to push up pay.
The British Chambers of Commerce said in its recruitment outlook for April to June that recruitment difficulties remained, especially for skilled manual or technical jobs, professional or managerial jobs, and semi-skilled or unskilled jobs. It said firms in the hotels and catering services, transport, and retailing and wholesaling sectors reported facing significant recruitment difficulties.
A tightening labour market is putting pressure on wages to increase, as total and regular weekly pay grew by 4 percent and 3.7 percent, respectively, in the year to July. However, both real regular pay (470 British pounds) and real total pay (502 pounds) were less than the values reached in previous peaks in 2008 by 3 pounds and 23 pounds, respectively.
Though the ongoing strength in pay packets is a plus for workers, wages may be pushing at their limit. Cash-strapped small and medium-sized enterprises (SMEs) in particular are already finding it difficult to compete for talent by upping their salary offers, Parikh said. (1 pound = 1.23 U.S. dollars)