There are more job vacancies than unemployed people across the UK for the first time ever – but the scarcity of jobseekers is failing to boost wages for most workers. Living standards campaign group the Resolution Foundation warns that Britain’s wage squeeze will get “far worse”, as the cost of living continues to spiral.
The unemployment rate among people aged 16 and over for January to March fell to 3.7%, or around 1.26 million, the latest Office for National Statistics (ONS) figures show. At the same time, ONS survey data suggests the number of vacancies rose slightly to 1.29 million – the first time on record the number of advertised jobs has risen higher.
Figures suggest bosses are using bonuses in a bid to attract the relatively small pool of potential employees, with total pay including bonuses rising by 7% in the three months to March, when compared with the same period a year earlier. Total pay has even grown by 1.4% in real terms (after adjusting for inflation), suggesting big bonuses have allowed total average pay to keep pace with the rising cost of living.
However, regular pay (excluding bonuses) fell by 1.2% in real terms over the period, the steepest drop in nearly 10 years. he Resolution Foundation, which campaigns to improve living standards among low- and middle-income families, said the true picture of pay pressures could be even worse.
It said this was because the ONS figures were still affected by last year’s furlough scheme to support workers during the pandemic, masking real shifts in pay.
Hannah Slaughter, senior economist at the Resolution Foundation, said: “The UK labour market continues to tighten, with the number of unemployed people having fallen below the number of job vacancies for the first time ever. People are taking advantage of these conditions to move jobs, and employers are responding by paying bonuses to hire or retain key staff.
“But for the vast majority of the workforce, the labour market may feel far less hot. There is little sign of wider pay pressures building and real wages are getting squeezed even tighter. With inflation having shot up in recent months, the scale of Britain’s wage squeeze is going to get far worse.”
The ONS figures also show there is no sign of a reversal in the recent trend of people becoming economically inactive – those neither in work or looking for it. The Resolution Foundation said half a million largely older people have completely disengaged from work, which is likely to shrink the economy.
