Skip page header and navigation

UK’s temporary workforce tumbles 14.4%, unemployment rate up to 4.4%

UK’s temporary workforce tumbles 14.4%, unemployment rate up to 4.4%

July 18, 2024

Main article

The number of temporary employees in the UK fell year-on-year by 14.4% during the March to May 2024 period, according to seasonally adjusted data from the Office for National Statistics.

For the March to May period, the number of temporary employees stood at 1,438,849. This was 0.81% higher than the three-month period from February 2024 to April 2024.

The ONS data showed that the number of men who were temporary employees stood at approximately 718,642 during the March to May period while the number of women who were temporary employees stood at approximately 720,207.

Of the overall 1.42 million temporary workers during the period ended May 2024, approximately 285,815 were temporary because they could not find a permanent job; 410,960 did not want a permanent job; 158,414 had a contract with a period of training, and 583,658 cited other reasons.

Further labour market data showed the UK unemployment rate (for people aged 16 years and over) was estimated at 4.4% in March to May 2024, above estimates of a year ago, and increased in the latest quarter. 

In March to May 2024, the highest unemployment rate was in the East Midlands (5.6%) and the lowest was in Northern Ireland (2.0%). The largest change in the unemployment rate was in the East Midlands, up 2.4% compared with estimates a year ago, while Wales saw the largest decrease, down 1.5%.

Meanwhile, the UK employment rate (for people aged 16 to 64 years) was estimated at 74.4% in March to May 2024, below estimates of a year ago, and decreased in the latest quarter. 

In March to May 2024, the highest employment rate in the UK was in the South East (78.4%) and the lowest was in Wales (68.7%). The largest change in the employment rate was in the North East, down 4.6% compared with estimates a year ago, while London saw the largest increase, up 1.1%.

ONS data also showed the UK economic inactivity rate for people aged 16 to 64 years was estimated at 22.1% in March to May 2024, above estimates of a year ago, but decreased compared with the latest quarter. 

In March to May 2024, the highest economic inactivity rate was in Wales (28.7%) and the lowest was in the South East (18.4%); the North East saw the largest increase compared with estimates a year ago, while the East Midlands saw the largest decrease.

Estimates for payrolled employees in the UK increased by 54,000 (0.2%) between April and May 2024, and rose by 265,000 (0.9%) between May 2023 and May 2024.

The early estimate of payrolled employees for June 2024 increased by 16,000 (0.1%) on the month and increased by 241,000 (0.8%) on the year, to 30.4 million. Comparing June 2024 with the same period last year, changes in the number of payrolled employees ranged from a 2.4% increase in Northern Ireland, to a 0.5% increase in London.

When it comes to vacancies, in April to June 2024, the estimated number of vacancies in the UK decreased by 30,000 on the quarter to 889,000. Vacancies decreased on the quarter for the 24th consecutive period but are still above pre-coronavirus (Covid-19) pandemic levels. 

In terms of earnings, annual growth in employees’ average regular earnings (excluding bonuses) was 5.7% in March to May 2024, and annual growth in total earnings (including bonuses) was 5.7%.

Annual growth in real terms (adjusted for inflation using the Consumer Prices Index including owner occupiers’ housing costs (CPIH)) for regular pay was 2.5% in March to May 2024, and for total pay was 2.2%. 

Early estimates for June 2024 indicate that median monthly pay increased by 3.6% compared with June 2023; it is likely that this annual growth appears low because of the influence of a large pay settlement in June 2023 estimates.

The ONS also noted that there were an estimated 49,000 working days lost because of labour disputes across the UK in May 2024. 

Commentary

ONS director of economic statistics Liz McKeown said in a press release, “Earnings growth in cash terms, while remaining relatively strong, is showing signs of slowing again. However, with inflation falling, in real terms it is at its highest rate in over two and a half years.”

“We continue to see overall some signs of a cooling in the labour market, with the growth in the number of employees on the payroll weakening over the medium term and unemployment gradually increasing,” McKeown said. “The number of job vacancies is down across most sectors, led by retail and hospitality. The total has now been falling for a full two years, though it remains above pre-pandemic levels.”

Recruitment and Employment Confederation (REC) Chief Executive Neil Carberry said, “Today’s labour market numbers reflect the gentle slowdown that business surveys have been reporting for the past few months. Vacancies are now falling back to their pre-pandemic level, but the impact of last year’s high inflation is sustaining pay rates.”

“The new government seems to appreciate the formidable challenges we face, including high economic inactivity and widespread skills mismatches,” Carberry added. “Yesterday’s announcements on UK-wide Apprenticeship Levy reform and the creation of Skills England are positive, though how the new English skills body is set up will define its success. Firms need more focus on local activity – not top-down bureaucracy.”

Michael Stull, managing director, ManpowerGroup UK said, “As today’s latest ONS stats attest, there has been a slight increase in the number of payrolled workers and economic inactivity has also decreased slightly on the last quarter, which is welcome news. The total number of people in the UK workforce, however, has shrunk overall compared to last year while economic inactivity is still at a stubbornly high level and unemployment rates remain on the rise – all of which is cause for concern.”

“Our own research indicates that eight-in-ten UK employers still aren’t able to find workers with the skills they need which is further exacerbated by the UK’s long-standing economic stagnation, high living- and labour costs and low productivity,” Stull added. “Today’s latest ONS data adds a further note of urgency to the legislative priorities of Prime Minister Sir Keir Starmer’s new Labour government, as outlined in yesterday’s King’s Speech.”

Kate Meadowcroft, UK-based partner in the employment and pensions team at DWF, said, “It is perhaps unsurprising that the labour market has shown some sign of difficulties against a challenging economic climate.  With the general election behind us and a new government in place we are expecting a raft of employment legislation which will inevitably impact the employment market.  We may well see employers acting with some degree of caution, particularly with regard to recruitment with unfair dismissal protection pledged to become a day one right.”

The ONS also published an update on the Transformed Labour Force Survey (TLFS) and Labour Force Survey (LFS). The TLFS is the long-term solution for collecting labour market data given the context of declining response rates in social surveys, which has been experienced across many countries.

It will extend the dual run of the TLFS and LFS to provide further quarters of data for comparison, including accounting for any seasonal differences, which will help increase user readiness and confidence. It will also test further design improvements within the TLFS; adding that it recognises that any significant changes introduced to the TLFS would require an additional period of dual running with the LFS, to ensure stable and comparable data.