Number of employees above pre-pandemic levels, ONS data shows

Figures reveal job vacancies and unemployment both decreased, yet pay is failing to keep up with inflation

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The number of payrolled employees has risen to a record high and is now well above pre-pandemic levels, data from the Office for National Statistics (ONS) data has found, yet pay was failing to keep up with inflation.

The latest ONS Labour market overview, released today (13 September), found that the number of payrolled employees rose by 718,000 since February 2020 to a record 29.7 million in August, a monthly increase of 71,000.

The unemployment rate decreased to 3.6 per cent, the lowest rate since May to July 1974, and the number of those unemployed for up to six months decreased to a record low of 720,000.

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The number of job vacancies in June to August this year was 1.26 million, a decrease of 34,000 from the previous quarter, the largest quarterly decrease since June to August 2020. 

However, the number of unemployed people per vacancy remained at a historical low of 1.0 for the sixth consecutive period (May to July). The number of Workforce Jobs rose to a record high of 35.8 million.

Jane Gratton, head of people policy at the British Chambers of Commerce, said vacancies remained high, and the tight labour market was affecting firms’ ability to invest and grow. “As rising costs force businesses to put investment plans on hold, budgets for people training and development are taking a hit”.

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“Government can help by reducing the upfront costs on business and providing training-related tax breaks, increasing flexibility in the apprenticeship levy, and ensuring jobseekers have access to rapid retraining opportunities,” she said.

The data showed that growth in regular pay (excluding bonuses) was 5.2 per cent in May to July; adjusted for inflation, regular pay has fallen by 2.8 per cent over the year. For the private sector, regular pay growth was six per cent during this period, and two per cent in the public sector – the largest difference between the two sectors outside of the height of the  pandemic.

Tania Bowers, global public policy director at the Association of Professional Staffing Companies, said the decline in vacancies reflected the fact that businesses were winding down after the first summer in a while where people could travel internationally. But, she noted, there was a continued lack of talent availability. Bowers called on Liz Truss, the new prime minister, to prioritise the employment and skills agenda, which includes “ensuring global trade deals are negotiated to include skills, the workforce and the mutual recognition of services and professional qualifications as well as tariffs and goods”.

Bowers noted that the cost of living crisis had failed to increase salaries, calling the figures “alarming”. “This disparity between the rise in inflation and salaries will only add to the skills struggles of the UK and won’t support economic growth on the scale that’s needed across the country,” she said.

Gregory Thwaites, research director at the Resolution Foundation, said any pay increases were not enough to keep up with inflation, but that the latest outlook on inflation may mean pay packets will shrink at a slower rate than before. “Wider economic turmoil also looks to be affecting the jobs market,” he said. “Instead of the cost of living crisis tempting people back into work, more people are exiting the jobs market altogether, primarily [for] poor health reasons.”

The data also showed that the economic inactivity rate increased by 0.4 percentage points on the previous quarter, to a 21.7 per cent change on February 2020. The majority of this group are the long-term sick (352,000) and students (271,000).

Commenting on this part of the dataset, Tony Wilson, director at the Institute for Employment Studies, agreed that the government should take action on the number of those out of work because of illness. “NHS waiting lists, poor mental health, a lack of specialist employment support and long covid will all be playing a part in this,” he said.