For the first time since records began, the UK unemployment rate has dropped below the level of job vacancies according to the Office for National Statistics [ONS].
The unemployment rate receded to 3.7 per cent between January and March, the lowest in almost 50 years.
On the other hand, job vacancies soared to a new high of 1.3 million during the first quarter of the year.
However, the ONS warned that the numbers showed a “mixed picture”. While unemployment fell, wages excluding bonuses have not seen the positive trajectory required to keep pace with inflation.
With inflation only set to grow over 2022, living standards are expected to worsen.
Salaries excluding bonuses increased 4.2 per cent between January and March, while inflation hit seven per cent and is expected to peak at around 10 per cent by the end of the year.
This development meant that pay without bonuses when adjusted to account for rising prices actually fell by 1.2 per cent, the biggest drop seen in nine years.
Responding to the numbers, chancellor Rishi Sunak acknowledged that it was “anxious times for people” but said that it was “reassuring that fewer people are out of work than was previously feared.”
Ben Harrison from the Work Foundation think tank said that despite the positive numbers around employment, the ONS findings only “underline the challenges facing workers who are seeing inflation eat away at their living standards.”
Total employment also remains below levels seen before the Covid-19 pandemic, while people moving from one job into another also reached record highs which the ONS said was “driven by resignations rather than dismissals” as workers seek out better paid roles.
Darren Morgan, the ONS director of economic statistics, commented: “Since the start of the pandemic, around half a million more people have completely disengaged from the labour market.
“However, job vacancies are still rising, reaching yet another record high.”
Workers in industries which have enticed staff to join through bonus payments and better salaries have benefited, with total pay with bonuses increasing by seven per cent between January and March which has managed to keep pace with inflation.
Morgan added: “Continued strong bonuses in some sectors such as construction and especially finance mean that total pay is continuing to grow faster than prices on average, but underlying regular earnings are now falling sharply in real terms.”
Yet, as the cost-of-living crisis continues to bite and inflation rises toward the 10 per cent mark, the Bank of England has warned that demand in the labour market could fall as firms begin to tighten their purse-strings, therefore pushing unemployment up again.
Photo by Clem Onojeghuo on Unsplash
