Since the 2020, almost 600,000 people have departed the labour force.
Unexpectedly, the UK’s unemployment rate dropped to its lowest level since 1974 as a record number of people left the labour field.
According to the government, there were 3.5% of adults looking for employment in the 3 months that ended in August, down to 3.6% the previous month and the lowest rate since 1974. No change was anticipated by economists.
The findings increase worries about a labour shortage. Which is making it more difficult for businesses to locate the workers they need to grow. Inflation and wage growth are also being fueled by it, and the Bank of England has sworn to combat both with increased interest rates.
- The workforce is shrinking as unemployment rises to record levels.
- Figures increase fears about inflation and put pressure on rates.
David Bharier, chief of research at the British Chamber of Commerce, declared that the labour market in the UK is at the tightest point in recent memory. “Many firms are unable to serve their current clients and expand due to shortages.”
Following the release of the report, the pound dropped that much as 0.5% to $1.0998, indicating broader investor concerns about the state of the UK public finances.
The numbers were praise by the Chancellor for the Exchequer Kwasi Kwarteng. Who said they demonstrated how “resilient” the UK economy is.
However, the government’s goal of raising the nation’s rate of economic growth to 2.5% is significantly hamper by labour shortages.
Average Income Increased, But Real Salaries are Roughly 3% Lower
According to data from the Office for National Statistics, the average earnings growth excluding incentives surged to 5.4%. For millions of households, that still represents a dramatic decline in living standards because it is just half the inflation rate. On a yearly basis, real salaries are roughly 3% lower.
The wage difference between employees in the private and public sectors grew much wider. Calls for protests over government spend will undoubtedly increase as a result of the record 4.1 % point gap at a time whenever the chancellor must reduce spending to pay for his significant tax cuts.
The loss of the tens of thousands of workers ever since start of the pandemic has exacerbated the 6.2% increase in private-sector salaries. And there are few indications that the cost-of-living problem is encouraging them to return.
Since records began to be kept in 1971, inactivity—the number of people who are unemployed and aren’t looking for work—has increased at the fastest rate.
In the most recent three months, 252,000 people stopped working. Primarily due to long-term illnessamong older workers reaching a historic high and young people enrolled in school.
Dropping Jobs
The most recent data showed some indications that the job market conditions would only gradually improve, as predicted by economists.
The number of openings decreased by 46,000 in the q3, the most in more than 2 years. There were 109,000 fewer individuals working.
According to the survey, the trend persisted throughout September as both companies and employees prepared for a potential downturn.
Since September, the Bank of England has increased interest rates 7 times. And so when policymakers meet in November, the money markets are pricing in an aggressive one percentage point increase.
That will make things worse for consumers and businesses, who already face inflation that is close to double digits.