Britain is experiencing a significant downturn in its job market, with vacancies falling to their lowest level in 12 years and unemployment showing an upward trend, according to recent official figures. The Office for National Statistics (ONS) reported 707,000 job openings in the three months to July, a figure not seen since November 2014, excluding the pandemic period.
This situation, described as a 'jobs drought,' has led many businesses to halt hiring. Reports suggest firms are facing increased labor costs and other operating expenses, which are likely influenced by the government's policies. These include a £25 billion increase in employer National Insurance contributions, substantial rises in the minimum wage, and escalating energy costs.
Business groups have indicated that the jobs market is stagnating, with private sector workers bearing the brunt. Pay growth has slowed to 2.8 percent, a rate that barely keeps pace with inflation and is less than half the 6.1 percent average enjoyed by public sector employees.
Business Closures and Unemployment Figures
The pressure on businesses is also evident in rising insolvency rates. The Government's Insolvency Service reported 1,931 company liquidations last month, a 5 percent increase from the previous month. Ben Harrison, head of the Work Foundation think-tank, stated that the figures suggest the UK is "trapped in a deepening jobs drought."
The headline unemployment rate for the three months to June remained stable at 4.9 percent. However, the figure for June alone rose to 5.4 percent, a notable increase from 4.6 percent the month prior. Prior to the current government's tenure, unemployment on this measure stood at 3.8 percent. This single-month figure has not been higher since 2015, excluding pandemic effects. Forecasts from institutions like the Bank of England anticipate the unemployment rate will exceed 5 percent this year.
Further data from the ONS reveals a decline in the number of employees on UK payrolls, which fell by 13,000 in July. Over the past year, payroll employment has decreased by 94,000, and by 183,000 since just before the general election.
Impact on Young Workers and Benefit Claims
Young people, particularly those aged 16 to 24, are disproportionately affected, with unemployment in this demographic at 16.2 percent, totaling 739,000 individuals. Conservative shadow business secretary Andrew Griffith commented that these figures indicate "Labour isn't working," attributing the loss of nearly 100,000 payroll jobs over the year to "Labour's attacks on business."
Department for Work and Pension figures also highlight a growing number of individuals claiming universal credit who are not expected to seek work. In May, half of the record 8.4 million universal credit claimants fell into this category, with only 1.6 million required to search for employment.
Alan Milburn, former health secretary, noted in his review of youth inactivity that an increasing number of people perceive hard work as unrewarded, which he argues undermines a core tenet of the social contract. The ONS figures and related data point to a challenging economic climate for both businesses and job seekers in the UK.