Vacancies continue to fall as employers blame increased cost of workers

UNEMPLOYMENT has remained unchanged again in the three months to June. Britain’s jobless rate stayed steady at 4.9%, according to the latest figures from the Office for National Statistics (ONS). Meanwhile, job vacancies have continued to fall and are now at their lowest level in over five years, dropping by 6,000 to 707,000 between May and July this year. The ONS said its survey found that small firms may not be recruiting because of increased labour costs and other business expenses. Sign up for the Money newsletter Thank you! And in a further sign that the jobs market is weakening, the number of employees on payroll fell by 78,000 (0.3%) in the last year. In a small bit of relief for workers, wage growth rose to 3.5% in the three months to June and was 0.7% higher after taking Consumer Prices Index inflation into account. But it fell to 2.8% in the three months to June – the lowest level since the three months to October 2020. Liz McKeown, ONS director of economic statistics, said: “The labour market picture is little changed overall, with some softening still evident. “Employment, unemployment and inactivity rates have all remained steady, while the number of employees on payroll fell slightly in the latest quarter. “Vacancies remain broadly flat, though a small fall in the latest period puts them at the lowest level in more than five years.” Most read in Money She said the latest drop in vacancies was mainly driven by smaller businesses, who are not hiring new staff or replacing workers who leave due to a hike in labour costs. Unemployment has now been at 4.9% since February this year. Meanwhile, the number of job vacancies fell to its lowest level since the pandemic this summer as businesses cut back on hiring. Experts say Britain’s jobs market may get even “rougher” in the coming months, due to higher energy costs and fears of tax hikes in the upcoming Budget. Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales, said: “The UK labour market remains stuck in a low-churn limbo, with employers reluctant to hire, fire or offer bigger pay rises as they grapple with rising costs, intensifying global headwinds and heightened policy uncertainty. “The persistent slide in vacancies is a red flag for the jobs market, suggesting labour demand is shrinking amid soaring employment and energy costs, while greater automation is also squeezing some entry-level roles. “The UK jobs market is likely in for a rougher ride in the months ahead, as rising energy costs and growing speculation over tax rises ahead of the October Budget dampen employers’ appetite to hire, pushing unemployment modestly higher.” Comment now