In the current economic climate, several observers have highlighted a slowdown in the labour market both in the UK and around the globe. This slowdown has come to affect players across the board, as reported by research firm William Blair, which identified that job postings by Big Four firms have decreased by 50% compared to last year.
It is within this context that the ONS released its February 2023 labour market overview, shedding light on the current state of the UK’s labour market.
“The headline indicators continue to point towards a slowdown, showing the labour market is not immune to the pressures facing the wider economy. Vacancies are now down 11% from their peak, while unemployment and redundancies both increased. While vacancies are still high by pre-pandemic standards, and unemployment and redundancies remain low, the direction of travel appears to be clear.
“Vacancies are falling the fastest in sectors that are most affected by the economic slowdown. This includes consumer-facing sectors such as arts, entertainment and recreation, energy-intensive sectors like manufacturing, or those sensitive to interest rates, like real estate. The public sector is one of the few industries where vacancies have not fallen back from their 2022 peak – likely due to continued difficulties in attracting staff due to larger pay rises in the private sector.
“More positively, there was a record-high net flow of people coming out of economic inactivity over the last quarter. We expect that at least 300,000 inactive working age adults could return to the labour market over the next year, as we set out in our latest UK Economic Outlook.
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“Going forward, we expect that the labour market will continue to cool as the economy slows down. The unemployment rate is likely to continue rising, potentially peaking at around the 5% mark that was reached during the pandemic”.