Peninsula surveyed 577 businesses to find out how they are preparing for the implementation of the Employment Rights Bill and their concerns around the risks posed by the different changes.
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Pay growth and job vacancies have been gradually falling in recent months
Average pay rises without bonuses fell to 7.3% in the last quarter and although still strong this has been gradually dropping. The figure was 7.2% including bonuses. Pay growth in the public sector remained high at 6.9% after a round of near inflation rises.
Neil Carberry, REC chief executive, said: ‘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.’
After months of continual interest rate hikes and high inflation, there are nerves about the future trajectory.
Louise Murphy, economist at the Resolution Foundation said: ‘The UK’s historically high level of pay growth over the summer has been a major concern for policy makers, as it risks keeping inflation higher for longer for everyone.
‘But just as price pressure fell back sharply in October, so too has pay growth, as the big rises from earlier in the year fall out of the data. This will reassure Bank of England policy makers seeking to bring inflation down.’
Starting salaries for permanent jobs are at the lowest since March 2021 due to the increase in the number of candidates, while temporary salaries rose at the slowest rate in 33 months.
As well as pay growth slowing down, the estimated number of vacancies has also been dropping, in fact, these figures have been dropping gradually for 17 months straight.
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The medical profession, although seeing a decline in the number of permanent vacancies still has the highest number of vacancies while the construction sector has reduced by the most.
For temporary contracts the retail sector has dramatically reduced the number of vacancies across the sector in the last year.
The number of vacancies fell by 45,000 to 949,000 in the last three months while the unemployment rate remained at 4.2%.
The latest research from REC found that recruiters had filled 25 million temporary and contract roles in 2022 after companies began hiring again post-pandemic, supporting the estimation of current vacancies.
Richard Carter, head of fixed interest research at Quilter said: ‘The UK labour market continues to battle on despite the intense economic pressures it faces.
‘This dip in pay suggests the Bank of England’s previous interest rate decisions are beginning to have the desired effect and it will likely feel vindicated to continue to hold rates higher for longer as a result. Though the figures suggest another step has been taken in the right direction, the Bank will be keen to see a significant slowdown in wage growth before it begins to contemplate the possibility of cutting interest rates.’
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Peter DoneGroup Managing Director and Founder
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Peninsula Team