More job vacancies than unemployed, but pay falls behind spiralling inflation

The unemployment rate dropped to 3.7 per cent in the three months to March – the lowest since October to December 1974, the Office for National Statistics said.

For the first time, there were fewer unemployed people than job vacancies, although the fall was also due to a rise in the number of people dropping out of the jobs market, the figures showed.

The ONS also laid bare the scale of the mounting cost-of-living crisis, revealing that regular pay excluding bonuses dropped by 2.9 per cent in March when taking Consumer Prices Index inflation into account – the biggest fall since November 2011.

Pay including bonuses jumped 7 per cent and was up 9.9 per cent in March alone as firms ramped up rewards for staff amid a booming jobs market, seen in particular across sectors such as construction and finance.

The local figures for Lancashire showed that the number of people claiming work-related benefits, such as Universal Credit, fell in April.

In the Blackpool North and Cleveleys constituency there were 2,887 people claiming down 2.3 per cent on April last year. In Blackpool South there were 4,205 claiming, down 3.3 per cent while in Preston there were 3,785, down 2.5 per cent.

Chorley had 1,860 claimants, down 1.7 per cent; Fylde had 1,457, down 2 per cent, and Lancaster and Fleetwood had 1,873, down 1.9 per cent.

The Ribble Valley had 1,208 claimants, down 1.4 per cent; South Ribble had 1,330, down 1.4 per cent; while Wyre and Preston North had 991, down 1.4 per cent on April last year.

The latest ONS labour market data also confirmed another rise in the number of UK workers on payrolls, up 121,000 between March and April to 29.5 million.

Darren Morgan, from the ONS, said: “Since the start of the pandemic, around half a million more people have completely disengaged from the labour market.

“Total employment, while up on the quarter, remains below its pre-pandemic level."

He added: “Indeed, with the latest fall in unemployment, to its lowest rate since 1974, there were actually fewer unemployed people than job vacancies for the first time since records began.”

Pay has been failing to keep up with inflation for some months, despite strong earnings growth, and official data on Wednesday is expected to show another eye-watering rise in the cost of living – of 9.1 per cent in April – as last month’s hike in the energy price cap hits.

The Bank of England warned earlier this month that the cost crunch is set to leave the UK on the brink of recession, forecasting that inflation will peak at over 10 per cent later this year when energy prices soar again.

It is likely to see a reversal in the buoyant jobs market, with the Bank warning that the rate of unemployment will rise back up to around 5.5 per cent.

Commenting on the ONS Labour Market statistics for May 2022, BCC Head of Economics, Suren Thiru, said:

“Although payroll employment continues to rise and the unemployment rate is falling, the headline figures more reflect several distorting factors, including rising economic inactivity, rather than the reality on the ground.

“Record jobs vacancies highlight the perilous hiring crunch facing businesses. With rising economic inactivity confirming that the UK workforce is shrinking, labour shortages are likely to persistently drag on UK growth by stifling firms’ ability to operate at full capacity."