Is economic inactivity affecting candidate numbers?
This is the first article in this month’s series on the theme of ‘What’s happened to job vacancy candidates?’. More articles will be published throughout the month, and the full series can be found at monarchpersonnel.com.
Last month’s ONS labour market figures for the UK, which covered December 2021 to February 2022, identified a recovery in the labour market, but that economic inactivity is on the rise.
What does this mean? To begin, let’s take a look at the statistic highlights:
- The UK employment rate increased on the previous quarter by 0.1% to 75.6%.
- The unemployment rate decreased by 0.2% to 3.9%
- Economic inactivity is up by 0.1%
- Payrolled employees are up by 275,000 to a record 29.7 million
- The number of job vacancies rose to a new record of 1.318 million which is an increase of 105,000
- Growth in average total pay including bonuses was 4.8% and growth in regular pay without bonuses was 3.8%, but in real terms when taking inflation into account, the growth in total pay was 0.1% while regular pay fell by 1%
- The redundancy rate decreased on the previous quarter to a record low of 2.4 per thousand which is down by 1%
- Job vacancies were up on the quarter by 105,000.
What is economic inactivity?
Economic inactivity refers to the number of 16 – 64 year olds who are neither working nor actively seeking employment. The figure includes students, early retirees and those who are long-term sick. When economic inactivity is high, organisations find it harder to recruit as there are fewer people available to fill vacant roles.
How has the pandemic affected economic inactivity?
During the pandemic, the increase in the economic inactivity rates of 16 to 24 year olds was higher than of those of older age groups, as was the unemployment rate. These figures have reversed in the most recent figures which indicates that post-pandemic, more young people are finding their way back in to employment.
The recent economic inactivity figures are driven by the 50 – 64 age group. This may be due to taking early retirement in the face of a turbulent labour market or because older family members are stepping in to look after the young children of parents who can’t afford childcare.
Since the end of the Coronavirus Job Retention Scheme there has been an increase in the employment rate for women with very little change for men, while the inactivity rate has been driven by both men and women.
Regardless of which groups are seeing an increase in economic inactivity, or the reasons behind the statistics, economic inactivity has a direct impact on organisations with roles to fill. A full recovery in the labour market will rely on bringing economically inactive groups back to the workplace.
Other statistics from the ONS labour market overview
Increase in number of job vacancies
The increase in the number of job vacancies is indicative of a tight labour market. Previous Monarch Personnel articles have referred to the current candidate driven market which doesn’t seem likely to change any time soon. The lack of candidates is pushing up wages, and competition for the best talent is causing difficulties for organisations that are trying to recruit.
Socio-economic impact on the job market
The rising cost of living is having a direct impact on the job market. While businesses do what they can to offer attractive pay packages to existing and new staff, price increases in food, energy, fuel and consumables mean the average rate of pay in real terms has actually fallen compared to last year.
While wages fail to keep up with the rate of inflation the job market will remain turbulent. Businesses are, of course, also affected heavily by price increases and supply chain issues so they are facing a double whammy of paying higher wage bills and higher supply costs.
Look out for the next article
The second article in our April series will be published on Wednesday 20th April in which we will ask, where have all the candidates gone?
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