The UK’s unemployment rate for the period from August to October 2023 was largely unchanged on the quarter at 4.2%, according to alternative estimates from the Office for National Statistics.

Because of the increased uncertainty around the Labour Force Survey (LFS) estimates, the ONS published an alternative series of estimates of UK employment, unemployment, and economic inactivity. These figures were derived using growth rates from Pay As You Earn Real Time Information (excluding the early flash estimate) and the Claimant Count for the periods from May to July 2023 onwards. This is to provide a more considered view of the labour market while the LFS estimates are uncertain.

Further data from the ONS showed that the UK employment rate (for those aged 16 to 64 years) was largely unchanged on the quarter at 75.7% in the quarter ended October 2023.

The UK economic inactivity rate (for those aged 16 to 64 years) was largely unchanged on the quarter at 20.9%.

In the period from September to November 2023, the estimated number of vacancies in the UK fell by 45,000 on the quarter to 949,000. Vacancies fell on the quarter for the 17th consecutive period, the longest consecutive run of quarterly falls ever recorded but still above pre-Covid-19 pandemic levels. Most industry sectors showed quarterly falls in their number of vacancies during the period.

Meanwhile, annual growth in regular pay (excluding bonuses) in the UK was 7.3% in August to October 2023, this growth continues to remain strong but is not as high as in recent periods.

When comparing September to November 2023 with the same time last year, total vacancies decreased by 229,000 (19.5%) with falls in 17 of the 18 industry sectors. The industries that decreased the most were human health and social work, and professional, scientific and technical activities, where the estimated number of vacancies fell in both by 34,000.

Annual growth in employees' average total pay (including bonuses) was 7.2%. Annual average regular earnings growth for the public sector was 6.9% in August to October 2023, and is among the highest regular annual growth rates since comparable records began in 2001. Annual average regular earnings growth for the private sector was 7.3%.

In real terms (adjusted for inflation using the Consumer Prices Index including owner occupiers' housing costs (CPIH)), annual growth for total pay rose on the year by 1.3%, and regular pay rose on the year by 1.4%.

ONS data also showed there were 131,000 working days lost because of labour disputes across the UK in October 2023. Three-fifths of the labour disputes were in the health and social work sector. In October 2023, 49,000 workers were involved in labour disputes, the lowest number since June 2022.

The estimated number of workforce jobs in the UK in September 2023 was a record 36.8 million, an increase of 210,000 from June 2023. The total number of jobs includes both employee jobs and self-employment jobs. The estimated number of employee jobs has been on a largely upwards trend since September 2020, resulting in a record high of 32.5 million in September 2023.

The estimate of payrolled employees in the UK for November 2023 was largely unchanged compared with the revised October 2023 figure, down 13,000 to 30.2 million. The ONS cautioned that the November 2023 estimate should be treated as a provisional estimate and is likely to be revised when more data is received next month.

UK payrolled employee growth for October 2023 compared with September 2023 has been revised from an increase of 33,000 reported in the last bulletin to an increase of 39,000.

ONS director of economic statistics Darren Morgan said, “Our labour market figures continue to show a largely unchanged picture, with the proportions of people who are employed, unemployed or who are neither working nor looking for a job all little changed on the previous quarter.”

“Job vacancies fell again,” Morgan said. “This is now the longest period of decline on record, longer than in the immediate aftermath of the 2008 downturn. Nevertheless, the number of vacancies still remains well above its pre-pandemic level.”

“While annual growth in earnings remains high in cash terms, there are some signs that wage pressure might be easing overall. However, as inflation has been falling more quickly, pay continues to grow in real terms,” Morgan added.

Neil Carberry, Recruitment and Employment Confederation Chief Executive, said, “The labour market is clearly slowing, but employment is being underpinned by the fact that labour supply is so tight.”

“Today’s data reflects emerging trends from our monthly Report on Jobs that pay pressures are receding. We expect that to continue as the high pay settlements paid by employers in 2023 fall out of the data over the next six months. In the medium-term, there is a risk of inflation returning and lower growth if we don’t address the challenges raised by shortages through skills investment, a focus on productivity and a more sensible approach to immigration for work. That’s why firms want to see government adopt a people and productivity focused industrial strategy,” Carberry said.

“The number of vacancies is knocking on a million and, despite the longest period of falling numbers on record, is still above pre-pandemic levels,” Carberry added. “This shows the scale of the challenge we face. It’s time for the first priority to be growth – that’s the only way to bring the tax burden down and fund public services, and it requires our economy to be at the front of the government’s mind.” 

Michael Stull, Director at ManpowerGroup UK, said, “As the ONS finalises changes in how it collects UK labour market data over the coming months - to improve overall accuracy and reliability – the data released this morning shows us that overall trends are continuing into December; the employment, unemployment and economic inactivity rates are largely unchanged for the quarter, while wages are showing signs of a gradual reduction after high inflation, and jobs vacancies have fallen again but remain high overall.”

“This all comes at a time of concerning economic stagnation and when we know both anecdotally and from our own data that eight in ten UK employers are reporting difficulties in finding the skills and talent that they need,” Stull added. “It’s a struggle that is happening across all sectors and it means that even though most organisations are feeling understandably cautious going into 2024, their intent to hire is staying strong because they are facing more pressure than ever to plug those skills gaps.”

“Our advice to employers - who we know from our own Employment Outlook data released today are frustrated with hiring because of the skills shortages - is to rethink their recruitment approach and consider moving from experience-based, to skills-based hiring as part of a solution to these challenges and economic headwinds,” Stull said. “Those who are prepared to pivot, consider new ways of doing things, and embrace new technologies and skillsets with confidence, will have the best chance of unlocking growth and seeing positive changes in the New Year.  The same can be said of employees and candidates – it is those who are prepared to retrain, upskill and adapt, who stand to benefit as the labour market remains tight.”      

James Reed, Chairman, Reed.co.uk, said, “Examining Reed.co.uk’s data for October, it’s evident that the pace of salary growth is showing signs of moderation compared to earlier months in 2023. With a year-on-year increase of 5.3%, October represents the second slowest growth this year.”

“Looking at the year as a whole, the figures reveal a gradual decline in the rate of salary increase,” Reed said. “Comparing the latest data to earlier months, such as March with a 7.7% increase, and May with a 6.8% increase, it’s clear that the momentum has tempered.” 

“Although this is not the case for all industries,” Reed said. “Examining sector-specific trends, the retail sector stands out with an inflation busting 13% year-on-year increase in salaries. This is possibly a response to intense staffing pressures in the run-up to Christmas, as demand for festive workers outstrips supply.”

Tania Bowers, Global Public Policy Director at the Association of Professional Staffing Companies (APSCo), said, “There may be lingering questions around the Labour Force Survey statistics that mean the latest figures around self-employment may need to be revised, but the data does paint a similar picture of falling vacancies in the UK. However, it’s important to stress that this doesn’t mean that the labour market is in a concerning state. If we look at the broader picture, jobs remain above pre-pandemic levels.”

“When we also look at sector declines, vacancies have fallen most in human health and social work, and professional, scientific and technical activities – all areas that are experiencing long-standing skills shortages. With employers already struggling to source the required resources, they are unlikely to add more jobs, which will be impacting these statistics,” Bowers said. “This is further reflected in the fact that the number of jobs in the UK continued to grow in the revised data for September. This suggests that work is readily available across the country, but vacancies are being impacted by a lack of available resources. This will only increase the demand for self-employed and specialist contractors who are often able to take on more than one role at once.”