UK jobs markets suffers a fainting fit…will the patient get worse?
We now know that since the start of the year the number of payrolled employees in the UK has fallen by around 100,000 – adding to the emerging narrative that when it comes to employment, things are going in the wrong direction.
Fewer people employed, fewer vacancies and fewer jobs likely to be created. The ONS data dump came hot on the heels of the latest industry warning on the weakened state of the jobs market, with the CIPD revealing on Monday that confidence among UK employers has fallen to a low only previously seen during the Covid pandemic. More than a quarter of private sector respondents to their survey said they were planning to make redundancies.
Unlike other countries with weaker employment protections, the UK doesn’t often witness mass layoffs. Instead, we tend to see a gradual but pernicious decline in employment combined with a cooling of plans to create new positions. As Sarah Coles of Hargreaves Lansdown puts it, “If we were in a period drama, this would be the scene in which the labour market developed a persistent cough and started to faint into furniture. It’s not that the market is looking in horribly bad shape, there are just some telltale signs that the future may not be desperately healthy.”
The risk is that this fainting fit – taking place against a backdrop of low economic growth and expectations of a punishing Budget in the Autumn – turns into something worse. As things stand, the diagnosis is pretty obvious; the government has made it more expensive to employ people through hikes to national insurance and the minimum wage, and is about to make it much more complicated and burdensome via the damaging Employment Rights Bill.
It’s hard to see the UK labour market spring back to full health in the months ahead.
An earlier version of this article referred to the Labour Force Survey, when in fact ONS data is drawn from HMRC’s PAYE Real Time Information system. The article was amended on 15 May to rectify this error.