Unfilled vacancies piling further pressure on business 

BCC head of people policy, Jane Gratton, said the labour market remains incredibly tight, in many cases affecting firms’ ability to maintain profitable operations but solutions can be found if the government works with businesses.

“Although these figures show the employment rate has risen it is having no noticeable impact on the overall number of job vacancies,” she said.

“The problems in the labour market are restricting growth and choking off any hope of a recovery for many firms; as inflation, supply chain disruption and energy costs also add to their headaches.”

The latest Labour Force Survey (LFS) estimates for March to May 2022 showed that over the quarter, there was an increase in the employment rate, while unemployment and economic inactivity rates decreased.

The UK employment rate increased by 0.4 percentage points on the quarter to 75.9 per cent, but is still below pre- coronavirus (COVID-19) pandemic levels.

The number of full-time employees increased during the latest three-month period to a record high. Part-time employees also increased during the latest three-month period, continuing to show a recovery from the large falls in the early stages of the coronavirus pandemic. The number of self-employed workers fell during the coronavirus pandemic and has remained low, although the number has increased during the latest three-month period. The increase was driven by part-time self-employed, and was largely offset by a decrease in the number of full-time self-employed.

Ms Grattan said there are several avenues open to businesses and the government to shift this data in the right direction.

“We need to bring more economically inactive people back into the UK labour market by offering flexible working practices, rapid re-training opportunities and a focus on workplace healthcare and support,” she said.

“The Government must also reform the Shortage Occupations List criteria to include more jobs at more skill levels to give firms breathing space to train and upskill their workforce.

“The huge number of vacancies is holding back productivity and growth, and employers are at their wits’ end.”

Jake Finney, economist at PwC UK, said the data showed that workers are seeing their pay fall in real terms, despite demand for labour remaining at record highs.

“Real pay excluding bonuses fell by 2.8 per cent year-on-year in May, its sharpest fall since the ONS started recording data on earnings. Consecutive falls mean that, in real terms, regular pay levels are only marginally higher than they were prior to the global financial crisis. The average worker, therefore, has seen little upward movement in their pay for almost 14 years,” he said.

“Despite workers seeing their pay fall in real terms, the rest of the job market data indicates that the UK labour market has continued to perform strongly despite significant economic headwinds. Unemployment fell to 3.8 per cent, while redundancies reached another record low. Economic inactivity levels also declined, suggesting that workers are starting to return to the labour market following absence due to long-term sickness and other reasons. 

“The UK’s heatwave could result in a reduction in hours worked as record high temperatures drain worker productivity levels and make it harder for people to get to their place of work.”