Robust pay growth despite a cooling labour market provides election campaign backdrop

Responding to today’s ONS labour market figures, Jon Boys, senior labour market economist for the CIPD, the professional body for HR and people development, comments:

“Taken in the round the figures suggest that the labour market continues to cool but it’s a slow and gradual process. Unemployment and inactivity have edged up. However, unemployment remains at what is historically a very low level. Vacancies continue their long-term downward trend. This reflects that there is less churn in organisations than there was immediately after the pandemic and therefore a lesser need to hire to replace lost staff.

“Pay continues to defy the gravity of a cooling labour market, and regular earnings grew by 6%. With lower inflation this translates to a real-terms pay rise of 2.3%, helping to alleviate cost-of-living challenges.

“Big economic shocks like a pandemic require a quick response and innovative solutions but the slow and steady labour market we now find ourselves in gives employers and policymakers time to react. The big challenges of the next decade such as pursuing net zero and providing public services will require a focus on the workforce. The economy will need not only a larger workforce but also one equipped with the right skills. This will require a joined-up response that looks at immigration, education and skills policy, and health.”