“The labour market simply cannot get back on its feet after the pandemic. The employment rate is down for a second consecutive month and still has not recovered to its pre-pandemic level, while the number of economically inactive working-age people has risen to its highest since 2015.
“The continued rise in inactivity makes the UK an international outlier with long-term illness a major contributing factor pointing to a growing in-tray for the new health secretary. The labour force participation crisis keeps pulling us away from full pandemic recovery.
“The labour market simply isn’t attracting the number of workers it requires, resulting in a severely challenging outlook for employers at a time when the number of unemployed people per vacancy fell to a record low of 0.9. Despite a weakened economic outlook, there are still more job openings than unemployed people.
“Policy makers have so far resisted the urge to relax immigration rules to allow more foreign workers into the workforce to help release mounting staffing pressures. But with ‘growth, growth, growth’ top of the political agenda, immigration is one lever they could reach to increase the supply of workers.
“As a result of the tight labour market we’re seeing the strongest growth in regular pay outside of the pandemic period, 6.0% growth including bonuses and 5.4% excluding. But with inflation sitting at over 10%, pay packets remain squeezed. Private sector pay growth (6.2%) is near triple that of the public sector (2.2%), which makes for sombre reading given the likely nurses’ strike action over pay and staff shortages.”
