The number of vacancies on the job market has continued to fall while regular pay has increased for many workers.
The latest ONS figures show in September to November 2023, there was an estimated 45,000 drop in vacancies on the quarter, to 949,000. Vacancies fell on the quarter for the 17th consecutive period.
Alice Haine, Personal Finance Analyst at Bestinvest, said employers are becoming “increasingly cautious” about hiring due to uncertain economic conditions.
She said: “The cooling jobs market is feeding through into wage growth with the increase in regular pay, excluding bonuses, easing to 7.3 percent on the year in the three months to October.
“Annual growth in average total pay, which includes bonuses, also dipped over the same period to 7.2 percent – after one-off bonus payments to NHS and civil service staff inflated the figures over the summer.
“In real terms there was positive news with real pay growing 1.4 percent and total pay 1.3 percent once inflation is factored in – meaning that incomes are stretching further than they could before.
“While the hope is that real pay growth will remain positive in 2024 with inflation expected to ease to 2.8 percent towards the end of next year households should not expect their cost-of-living challenges to disappear entirely.”
The number of payrolled employees for November 2023 was largely unchanged, dropping 13,000 to 30.2 million, compared with the revisted October 2023 figure.
Strike action in October 2023 led to 131,000 working days being lost with three fifths of the labour disputes in the health and social work sector. However, there were 49,000 workers were involved in labour disputes, which was the lowest number since June 2022.
Looking ahead, Ms Haines said employers may remain reluctant to take on more permanent workers. She said: “With wage growth and the jobs market likely to soften further from here, as more people chase fewer jobs and redundancies rise, lingering economic uncertainty means employers may be hesitant to commit to permanent new hires as they plan budgets for the new year.
“People should prepare their finances for all eventualities, including the possibility of job loss. Building up a robust rainy-day fund is likely to become the most essential New Year’s resolution to commit to at the start of 2024.”
In more positive news, she said the cut in National Insurance announced in the autumn statement will soon benefit many people.
She explained: “Workers struggling to make ends meet will receive a pay boost at the end of January, when Chancellor Jeremy Hunt’s headline-grabbing two percent cut to the main rate of National Insurance in his recent Autumn Statement takes effect.
“The cut to 10 percent from 12 percent will save a typical employee earning £35,400 more than £450 a year, and those earning over £50,000 around £750.
“While the NI cuts will certainly provide some respite from the barrage of bills, it will only deliver a short-term boost to the 29 million workers set to benefit.
“In reality, incomes will remain squeezed as the effects of fiscal drag – where income tax thresholds fail to keep pace with inflation – pull more people into higher tax brackets as nominal wages rise.
“It means millions more Britons will either pay tax for the first time or find themselves tipped into a higher tax band when their pay increases as the continuing impact of ongoing freezes and reductions to personal tax thresholds take hold.”
Hayley Grange, founder of Twenty2 Recruitment & Consultancy, said November and December have been unusually busy for her group.
She said: “Businesses have been eager to hire in preparation for January or, in most cases, before the end of the year. The jobs market seems to be holding up fairly well given the numerous headwinds.
“Hiring in November and December can be a challenge as it’s a busy time and the candidate market often slows down, meaning vacancies can outweigh candidates. Because of this, our advice is to submit your application and don’t wait as now represents a good window of opportunity.”
Adam Myers, head of HR consulting at Southampton-based Stellamar, said there is a lot of optimism for recruiting and business growth going into 2024.
He said: “The businesses we work with are keen to hire, although we are seeing more focus on entry-level roles. With the focus on entry roles comes the problem of how to attract and retain Generation Z as organisations, generally led by Gen X and boomers, are failing to connect with the incoming talent pool.
“This is going to cause problems in the labour market moving forward, as is the failure to recognise the need for good diversity, equity and inclusion policies, and accessibility practices.”
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