The UK labor market is at its narrowest in at least 15 years
The UK job market is the tightest in at least 15 years, according to analysis showing very few people want to work more than they actually do.
The Office for National Statistics said Monday that a wide range of measures indicated that underutilized employment was at or close to an all-time low in the second quarter of 2022.
According to the most widely used analysis, the number of job vacancies in the British economy this year has exceeded the number of unemployed people for the first time, according to the analysis.
The data will reinforce fears in the Bank of England that a tightening labor market – where workers can demand and secure higher wages – will mean inflationary pressures will persist for longer, forcing policy makers to tighten the noose further.
The Office for National Statistics has also looked at several broader measures of labor supply. These took into account the frustrated workers, who do not look for a job because they think they will not find it; Those “marginally related” who are not currently looking for work or available to start a business; and part-time workers who choose longer hours if they can.
After the financial crisis, “hidden” stagnation in the labor market remained high – even as the economy began to recover and the main measure of unemployment was declining. Some economists say this is one reason wages have stagnated for the better part of a decade.
But the Office for National Statistics said the post-Covid recovery proved different: All of these alternative measures reversed the same trend, with labor supply at its lowest levels in records going back to the 1990s.
Another measure showed that the UK’s labor market slump was the lowest since 2007, the Office for National Statistics said. This analysis used the same methodology that Eurostat uses for EU countries.
This measure of underutilization showed that 9.2 percent of the active working-age population was affected in the second quarter of 2022, down from the pre-pandemic rate of 12.1 percent.
The findings by the Office for National Statistics confirm a number of recent business surveys that indicate that employers still find it difficult to fill vacancies, even as the economy weakens.
The Office for National Statistics said its analysis indicates that recruitment difficulties are largely due to a general labor shortage, due to higher economic activity and lower net immigration from the EU, rather than to any major mismatch between industries with the most vacancies and those with the most unemployment. .
These mismatches were evident at the beginning of the financial crisis of 2008, when unemployment rose sharply in manufacturing and construction, and at the beginning of the pandemic, when job vacancies were concentrated in the health sector. But the Office for National Statistics said it is now low.
Some economists believe that labor shortages could ease soon, as high inflation forces people who left the workforce during the pandemic to return to boost their incomes.
The cost-of-living crisis has “raised the incentive to work a lot,” said Paul Bevand, an expert on labor market statistics at the Institute for Learning and Work. But he noted that while there is some early evidence that older adults are ‘tolerant’ due to cost pressures, the higher rate of inactivity due to ill health is likely to be more permanent.