(Tuesday 13 December) the Office for National Statistics (ONS) published its latest labour market update. Responding to the figures, Neil Carberry, Chief Executive of the Recruitment & Employment Confederation (REC), said:

“Today’s data shows businesses and candidates are reacting to the economic situation, but the overall picture remains one of strong demand from employers. With employment and unemployment both rising slightly, and economic inactivity dropping a little, it may be that the long period of growing inactivity through the pandemic is ending. That would be good news for incomes for people returning to the labour market and for economic growth. There is still a lot to do to turn the trend around – employment is still well below pre-pandemic levels, and inactivity well above them. The number of temporary workers continued its recent rising trend – over 1.6 million temps help keep the country on the road, meeting employer needs at a time when labour availability is tight. They are the backbone of our economy, especially in the run-up to Christmas.

“On pay, we can see the private sector responding to the pressure that employees are under from inflation. REC data shows starting rates of pay have been rising strongly for a while now, and it’s clear these trends are now feeding into awards for companies’ existing staff.  Rises appear to be high, without chasing inflation and creating the risk of embedding it further. Given the scale of disputes in the parts of the public sector, and in industries where the government plays a key role, the growing gap between private and public pay awards ought to create space for negotiation if both parties approach negotiations with goodwill.

“The overall picture we see is one of a labour market that is still defined by labour shortage constraining its ability to grow. That’s why businesses need to work with their recruiters on innovative and effective strategies, and all firms are looking to Government to act on some of the barriers – from skills to immigration, and right to work checks to employment support, there is a huge amount the Government could do to fire up our labour market."