The latest UK jobs market report has been published by the Office for National Statistics (ONS) this week.
The headline finding for the three months until September 2019 was that UK employment has fallen at its fastest rate in four years. The sharp reversal of fortune has led some commentators to speculate that the UK job market has passed its peak.
But is it too soon to predict a job market slowdown? The current rate of employment stands at 76.0 per cent. While this represents a 0.1 per cent fall on the previous quarter, it also represents a 0.5 per cent increase on the previous year. While it can be tempting to seek out trends and reversals, it is not always helpful to magnify a perceived movement or exaggerate its impact.
At the same time, unemployment was reported to stand at 3.8 per cent. That figures sees total unemployment falling by 0.2 per cent year-on-year. The number of unemployed also fell by 0.1 per cent on the previous quarter.
So, if the numbers of employed and unemployed both fell in tandem, where did all the people go?
Increased economic inactivity
One of the key findings was an increase in economic inactivity. The ONS defines economic inactivity as individuals who are not in work, but who are also not actively seeking work. Job seekers who will be unable to commence working within two weeks are also classed as economically inactive.
The number of economically inactive individuals in the UK rose by 0.1 per cent on the quarter. Current economic inactivity stands at 20.8 per cent. This is a 0.3 per cent fall on 2018. However, the quarterly increase fits with a pattern of individuals leaving employment and exiting the jobs market.
Impacts and Opportunities
But what are those impacts on business? Finding opportunities means deciphering the numbers.
On the one hand, a fall in employment may mean new options for recruiters – as the appetite for permanent hires remains high among employers.
On the other hand, we should consider the reasons for economic inactivity. The protracted uncertainty around brexit may be taking its toll. EU nationals who have left their current employment and will not be seeking placement in the UK in future may still contribute to the official statistics. At the same time, the entire babyboomer generation now approaches the end of their working life. Babyboomers who have chosen an early, self-funded retirement may also be contributing to increased economic inactivity.
In these instances, recruiters will find fewer opportunities to source candidates. On the other hand, where new candidates do make themselves available, there is evidence to suggest that there is still high demand for staffing.
Finally, The Guardian suggests that the figures may force the Bank of England to cut interest rates. This would be a response to manage debts and prevent a cost-of-living crisis. In the past, however, the BoE has been cautious about reflecting short-term trends within its policies. A measured response and rate cut may or may not be on the cards in the near future.