Experts note a 'shift in the balance of power'
Employment rates in the UK increased while unemployment and economic inactivity rates decreased from March to May, the latest Labour Force Survey estimate has shown.
The Office for National Statistics (ONS) reported on Tuesday that the UK employment rate increased by 0.4 percentage points on the quarter to 75.9%, but is still below pre-pandemic levels.
During the three-month period, the number of full-time employees increased to a record high. Part-time employees also increased in numbers, which, according to ONS, continues to show recovery from the large falls in the early stages of the COVID-19 pandemic.
The number of self-employed workers fell during the pandemic and has remained low, although the number has increased from March to May. The increase was driven by part-time self-employed, and was largely offset by a decrease in the number of full-time self-employed.
Read more: Five easy ways you can get a mortgage when you are self-employed.
The latest estimate of payrolled employees for June 2022 shows a monthly increase, up 31,000 on the revised May 2022 figures, to a record 29.6 million.
Meanwhile, the unemployment rate for March to May 2022 decreased by 0.1 percentage points on the quarter to 3.8%. Those unemployed for up to six months increased over the three-month period at the fastest rate since late 2020.
Economic inactivity rates also decreased by 0.4 percentage points to 21.1% in March to May 2022. Since the start of the pandemic, the increases in economic inactivity were driven by those who were economically inactive and who did not want a job. This group have now also driven the quarterly decrease during the latest period.
The ONS said the number of job vacancies in April to June 2022 rose to 1,294,000. However, the rate of growth in vacancies has continued to slow down.
“Job vacancies continue to outweigh the number of applicants at the moment, which means that organisations are struggling to attract top talent,” Louise Skittrall, founder of Swindon-based Robinson Grace HR Consultancy, said.
“Employers are having to look at pay as a means of attracting applicants, but the importance of building a strong employee proposition has never been more important.”
The ONS also reported that employees’ average total pay, including bonuses, grew by 6.2% while regular pay excluding bonuses rose by 4.3% from March to May 2022. In real terms and adjusted for inflation, over the year, total pay fell by 0.9% and regular pay fell by 2.8%.
“With the cost-of-living at the forefront of everyone’s minds, pay and perks are key,” Skittrall said.
“Employers offering incentives such as working from home, free parking, electric charging points or subsidised staff meals, will appear considerably more attractive to prospective employees seeking a more cost-effective job choice.”
Read more: Is hybrid working here to stay?
Skittrall noted that employees now expect flexibility, hybrid working, and above average benefits as there remains a reluctance to return to the office full time.
“Employers are pitted against each other to win the race to recruit. With remote working commonplace now, job candidates are able to spread their search wider than ever before in applying for jobs anywhere in the world,” she said. “Employers are no longer able to simply match their nearest competitor and remain the top choice.”
David McCreadie, managing director of Birmingham-based IT recruitment consultancy Swi-tch, describes the situation as a shift in the balance of power, which currently “is very much with employees at the moment.”
“The market has shifted 180 degrees since the start of the pandemic and businesses are struggling to attract top talent,” she said. “Many companies are having to bend over backwards to secure talent, from offering 15%-20% increases on pre-pandemic salaries amid the cost-of-living crisis to fully remote opportunities.
“Businesses are really feeling the pressure of needing to invest in their staff. They are no longer competing with local businesses now that travel and location are no longer a major factor. The entire country has opened up to employees so employers need to do everything they can to retain and attract them.”
Read more: Working from home – what is the future for the mortgage industry?
Chris Maslin, director at Tunbridge Wells-based employee ownership specialists Go Eo, said many employees “loved this extra control and the freedom it provided.”
“People want the ability to influence their own lives, not have it dictated to them by their employers,” he said. “However, not everyone wants to run their own business. A stable income is still high up most people’s wish list and employee ownership can provide the perfect balance.
“Employee ownership breaks down the barriers between owners and workers. It’s the future of healthy capitalism.”
