FUNDAMENTAL DYNAMICS OF THE POST-PANDEMIC LABOUR MARKET REMAIN THE SAME

Posted on 19th May 2023

Responding to recent ONS labour market figures, Jonathan Boys, labour market economist for the CIPD commented “The fundamental dynamics of the post-pandemic labour market remain unchanged. Unemployment is low at 3.9% and the Bank of England expect it to rise only modestly in the coming years. The workforce remains smaller than pre-pandemic so the supply of candidates is restricted meaning recruitment issues will persist. Employers will need to think creatively in how they attract staff and consider all areas of job quality, not just pay, which continues to struggle to keep up with inflation.

“This labour market tightness continues to drive high nominal pay rises with regular pay growing by 6.7%. However, with stubbornly high inflation, pay packets are shrinking in real terms. Regular pay growth in the public sector was at its highest level since 2003 which has narrowed the gap with private pay growth. However, so long as a gap persists, the absolute difference in pay between the two continues to grow. This will exacerbate recruitment and retention problems in the public sector, key factors fuelling current industrial action.

“The pandemic has left a lasting mark on the UK's labour market, with a shrinking workforce and a mismatch of skills and demand. Employers need to offer more than just higher wages to attract and retain staff. They need to create quality jobs that offer flexibility, autonomy and meaning, as well as opportunities for learning and development. With a record number of people inactive due to sickness, there must be a stronger public policy focus on occupational health and keeping people in work, including reform of Statutory Sick Pay.”

For more information visit cipd.org/uk