The UK's labour market has been dealt a blow as job vacancies plummeted to their lowest level in five years, sparking concerns that businesses are becoming increasingly risk-averse. According to the Office for National Statistics (ONS), between March and May this year, there were 707,000 job vacancies – down from a peak of around 1 million in February 2022. This decline has significant implications for workers seeking employment, with some sectors feeling the pinch more acutely than others.
Professional services have been hit hardest by the decline in available roles, closely followed by retail and hospitality, which have also seen substantial drops. HMRC data reveals that new hires – or 'inflows' – in April were just 539,000, the lowest monthly figure since March 2021. The ONS's director of economic statistics, Liz McKeown, notes a potential shift towards self-employment amidst shrinking conventional job opportunities.
Despite this fall in vacancies, unemployment rates have decreased slightly to 4.9% for the three months to April, down from 5% in the preceding quarter. Average earnings continue to outpace price rises, with regular pay growing at an annual rate of 3.4%. However, private sector wage growth is at its lowest rate in five and a half years, suggesting reduced inflationary pressure from the labour market.
Business owners are feeling the strain, with some attributing recruitment difficulties to increased operational costs – including rising minimum wages and National Insurance contributions. Jamie Younger, who recently opened The Victory pub in south London, points to these factors as 'very difficult' and notes that many hospitality venues now prioritise experienced staff over younger individuals seeking their first jobs. This situation could limit opportunities for new entrants to the workforce.