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Labour market has “too many jobs and not enough people”

Pay growth declines sharply as labour supply tightens
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Peninsula Team, Peninsula Team

(Last updated )

The Labour Market Overview for December 2023, published by the Office for National Statistics (ONS), has been reviewed by various business organisations as reflecting the challenges that employers will face in 2024.

The Chartered Institute of Personnel and Development (CIPD) sums up the latest position by suggesting that the labour market can be characterised as having too many jobs and not enough people to fill them.

“Looking ahead to 2024,” it continues, “there will be some respite to employers with hiring difficulties as the labour market cools. The Government has signalled intentions to lower immigration, and we have an ageing population, both of which will weigh on labour supply.”

The Recruitment and Employment Confederation (REC) expects pay pressure to continue to fall away as the high pay settlements paid by employers in 2023 fall out of the data over the next six months. However, it warns of the risk of inflation returning and lower growth if the UK fails to address the challenges raised by shortages through skills investment, a focus on productivity and a more sensible approach to immigration for work.

Independent think tank, the Resolution Foundation, notes that the number of job vacancies fell for a 17th consecutive month with the number of employees on the payroll also falling slightly (by 13,000) between October and November (although the latter data are provisional and are likely to be revised).

The British Chambers of Commerce (BCC) also highlights a major shortage of skills across the economy and calls on the Government to encourage investment in training while the Institute of Directors (IoD) warns that measures to increase domestic labour supply are urgently needed.

Finally, PricewaterhouseCoopers (PwC) points out that the number of green jobs advertised in the UK has fallen from the record levels recorded in 2022, albeit at a smaller rate than the decline seen in the UK’s job market overall. High interest rates and a challenging economic backdrop have seen the number of total advertised roles fall by 29%, it notes, while the number of green jobs fell by 26%.

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