The rise in the number of individuals seeking employment coincides with a decline in job openings, indicating that the uncertain economic outlook is negatively impacting employment.
Approximately 220,000 more persons sought employment between December and February than in the preceding three months.
The unemployment rate increased marginally and job openings decreased for the ninth consecutive month, according to official data.
However, the data also revealed an increase in the employment rate as more individuals returned to the labor force.
Since the spring of last year, the overall rate of economic growth in the United Kingdom has been stagnant, as high energy prices and rising interest rates, along with strikes in several sectors, have taken their toll.
Tuesday’s data from the Insolvency Service revealed a significant increase in the number of companies declaring bankruptcy in March. Last month, there were 2,457 business bankruptcies, up from 1,785 in February.
Inflation – the rate at which prices increase – has been operating above 10%, remaining close to 40-year highs, and the most recent earnings data revealed that wage increases continue to lag behind inflation.
The annual increase in regular pay, excluding bonuses, was 6.6% between December and February, according to the Office of National Statistics (ONS).
However, when accounting for inflation, regular pay decreased by 2.3%.
In the three months before February, the ONS reported that the employment rate increased to 75.8%. During the same time frame, the unemployment rate increased from 3.7% to 3.8%.
The number of job openings decreased for the ninth consecutive month, with companies citing economic pressures as the reason for their reluctance to hire new employees.
From January to the end of March, the number of job openings decreased by 47,000 from the previous quarter to 1,105,000. However, the ONS reported that the number of job openings remained at “very high levels.”
Michael Stull, managing director of employment agency ManpowerGroup, stated, “We are beginning to see a decline in employer demand.” Nevertheless, we remain in a solid position.”
“More people are returning to the workforce,” he added, observing that more people over 50 and younger people were rejoining the labor force.
Daniel Ashville Louisy, the director of the construction company Ashville Aggregates, stated that despite the current high demand, many companies are putting construction projects on pause due to economic uncertainty.
In addition, he stated that profits were being compressed as a result of rising wages.
“Around two and a half to three years ago, plumbers and carpenters were earning the same as laborers,” he said.
“However, everyone wants the job to be cheaper because they lack certainty, so we cannot afford to hire new employees at the higher wage bracket.”
In response to the most recent data, the Chancellor of the United Kingdom, Jeremy Hunt, stated, “While unemployment remains close to historic lows, rising prices continue to eat into paycheques, which is why halving inflation this year is one of our top economic priorities.”
Rachel Reeves, however, stated that the government was holding the United Kingdom back. “Because of their lack of ambition for Britain, real wages are falling, families are worse off, hundreds of thousands fewer people are employed, and our economy is falling behind.”
Sarah Olney, a spokesperson for the Liberal Democratic Treasury, stated, “The Conservative party’s gross mismanagement of the British economy has caused inflation to rise and growth to plummet.”
It is always prudent to avoid placing too much weight on a single set of data, but the rate of pay increases across the economy has pleasantly astonished economists.
We may or may not be on the verge of a full-scale recession or a less severe downturn.
To date, however, the challenges confronting the economy have had only a minor impact on unemployment, obscuring only slightly the clear picture that it is a good time to seek employment.
The private sector’s average pay increase is down from its peak, but only marginally.
It is still one of the largest average wage increases in the majority of the last two decades.
Even in the public sector, employers with a free hand are paying more to combat the ongoing recruitment crisis; year-to-date wage growth was 5.3%.
Few will need to be reminded, however, that against double-digit inflation, this is still one of the largest real pay cuts private and public sector employees have endured since the 1930s.
