UK job vacancies hit a four-year low as rising employment costs take a toll on the labour market, with demand for workers weakening and salaries forecast to decrease.
UK Jobs Market Weakened by Growing Employment Costs
Job vacancies in the UK have fallen to their lowest level in nearly four years, with the number of jobs on offer dropping to 781,000 in the first three months of the year. This decline suggests that demand for workers is weakening as employment costs continue to rise.
The increase in labour costs, which came into effect in April, is expected to put downward pressure on pay over the coming months. According to Yael Selfin, chief economist at KPMG UK, this short-term impact will likely lead to a decrease in salaries. The rises in employer National Insurance Contributions and National Minimum Wage hikes are also forecast to weigh on salaries.
The UK unemployment rate remains at 4.4%, roughly the same as the previous three months. However, the employment rate for people aged 16 to 64 years is still below Labour’s target of 80%. The ONS has cautioned that its jobs figures should be treated with caution due to low response rates from respondents.
Wage growth in the UK is slightly ahead of the previous period and was lifted by the public sector. According to Liz McKeown, director of economic statistics at the Office for National Statistics, this increase in wage growth may indicate that some workers are benefiting from the rising labour costs.
Wage growth refers to the rate at which employee compensation increases over time.
In developed economies, wage growth is often influenced by factors such as inflation, economic growth, and labor market conditions.
According to the International Labor Organization (ILO), global wages grew by 2.4% in 2020, outpacing inflation rates.
In the United States, wage growth has been steady since 2018, with average hourly earnings increasing by 3.1% in 2020.
