The pandemic severely impacted the UK economy, but employment has rebounded surprisingly fast. In January 2022, the unemployment rate dropped to 3.5, lower than before the pandemic and down from its peak of 5.2 per cent. The unemployment rate is currently at a level unseen in almost 50 years, since 1974. Additionally, there were fewer layoffs last year, and job opportunities reached an all-time high in every sector of the economy.

Higher Wages

Due to the limited availability of labour, the wages have increased significantly. In the three months from September to November 2022, total pay rose by 6.4 per cent, the second-highest rate in the last 20 years. However, the wage increase was insufficient to cover the rising inflation, resulting in a negative 2.6 per cent real wage growth. This was considered inadequate by many workers, and as a consequence, there were more labour disputes.

National Living Wage

The government introduced the National Living Wage in April 2016. In 2019, they set a target for the wage to reach two-thirds of median earnings by 2024 for workers over 21 years old, taking economic conditions into account. Additionally, they tasked the Low Pay Commission with gathering evidence to help make future decisions on low pay.

On April 1, 2023, the national living wage for workers increased by 9.7 per cent to £10.42 per hour. This increase is based on the recommendations of the Low Pay Commission and has been fully accepted.

Possibility of Recession

Although the economic and inflation cycles and labour negotiations are still unfolding, experts predict that unemployment will increase to around 5 per cent in 2023 due to the potential for a recession. The figure is still considered low compared to past rates. Although the correlation between earnings growth and unemployment isn't straightforward, real wages have generally decreased when unemployment surpasses 7 per cent in the overall economy.

Complex Labour Market

The situation for UK labour markets is complex. Although unemployment is expected to increase, it does not necessarily mean job openings or salaries in all industries, professions, or positions will decrease. Neither does it guarantee that the shortage of skilled workers will improve anytime soon. Organisations should update their hiring, training, and workplace culture to stay competitive to adapt to the evolving labour market.

About Jennings Morton Friel Associate

Jennings Morton Friel Associates Ltd has been recruiting top-notch permanent and temporary talent for various leading businesses in Central London, Kent, and Surrey since 2002. They have a wide range of expertise and can work in the fields of commerce & industry, public practice, and education and charity. They specialise in finance & accountancy, allowing them to offer a personalised service that combines traditional values with a dedication to helping individuals achieve their goals.

Learn more about their services at https://www.jmfassociates.co.uk/bromley-accountancy-recruitment.