Jobseekers holding all the cards amid race to attract and retain talent

interactive investor comments on the latest ONS labour market overview.

• The UK employment rate increased by 0.1 percentage points on the quarter to 75.7%, but is still below pre-coronavirus (Covid-19) pandemic levels, according to latest figures from the Office for National Statistics
• The unemployment rate for January to March 2022 decreased by 0.3 percentage points on the quarter to 3.7%
• In real terms (adjusted for inflation) in January to March 2022, growth in total pay was 1.4% and regular pay fell on the year at negative 1.2%
• Strong bonus payments have kept real total pay growth positive, and real regular pay growth last fell on the year to more than negative 1.2% in September to November 2013.

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The UK has a glut of jobs – it is the labour supply that is an issue.

“The unemployment rate is at its lowest level since 1974, with job vacancies outstripping the number of unemployed people for the first time since records began.

“Jobseekers are holding all the cards as employers desperately seek to attract and retain talent to take their business to the next level in what has been a tumultuous period for recruitment.

“While millions have returned to work, many others remain on the sidelines. Long Covid, the reassessment of life priorities during the pandemic, and the accidental savers phenomenon, which provided some with a substantial cash buffer to bankroll a career break or retire early are among a number of factors contributing to a fall in labour market participation.

“The struggle to attract and retain talent has led to employers offering golden hellos and dishing out strong bonuses, which have driven wage growth to inflation-busting levels.

“However, not every worker has been so fortunate. Many have not seen their incomes keep up with inflation, which rose 7% in March from a year earlier, the fastest pace in three decades, and is hurtling closer to double-digit territory as the cost of living crunch intensifies. Pay packets are not stretching wide enough to meet the escalating cost of seemingly everything from food, energy and petrol.

“The strong unemployment data shrouds a mushrooming issue of people out of work and not looking for a job. Around half a million more people have completely disengaged from the labour market since the start of the pandemic, which is a worrying trend that needs to be addressed. The challenge for younger generations who fall under the ‘economically inactive’ banner is securing a job with meaningful career progression rather than a job that pays the bills.”