Pay growth and the jobs market have both slowed in recent months as the UK wrestles with the Bank of England’s rising interest rates, according to the latest ONS labour market overview.
Wages rose to 7.3 per cent, excluding bonuses, between August and October 2023, showing a slowdown in growth. Despite this, pay still outpaced inflation during the period.
As a result, the Bank of England are widely expected to hold interest rates at 5.25 per cent for the third time in a row.
During the period, ONS estimated that the number of UK job vacancies fell by 45,000 to 949,000 in total, the 17th consecutive fall. However, KPMG and the Recruitment and Employment Confederation (REC)’s UK Report on Jobs, observed a decline in the hiring landscape during November, indicating a potential stall is to come.
Derek Mackenzie, CEO of Investigo, part of The IN Group, said, ”Economic turbulence has understandably impacted the decision-making of businesses, but it is vital that staff remain a top priority as their skills are essential for business success.
The tech sector, in particular, is already facing a talent gap and technology such as generative AI not waiting for the economy to turn around. Therefore, organisations need to find a way to hire and train digitally adept staff to oversee their technology transformation.
“Hiring through entry-level roles or flexible contracts can help businesses gain access to digitally skilled staff, before providing on training, upskilling and reskilling to unlock the power of new recruits.”
Elizabeth Anderson, CEO of the Digital Poverty Alliance, said, “The wage slowdown across the UK is a huge concern as it means that more and more people in the UK will fall victim to the digital divide as budgets tighten and priorities shift.
There are already up to 19 million people suffering from digital poverty in the UK, through a lack of access to skills, devices and connectivity, and as the cost of living continues to squeeze, people are increasingly having to make tough choices such as broadband or heating.
“It is vital that government and industry recognise the danger, especially with regards to technology, as we are imminently at risk of millions more people going offline in our digital world.
“In fact, our research with Deloitte found that there is up to a £17 billion Earning Premium that could be generated if those in work gained Essential Digital Skills for Work, creating a significant incentive for both government and industry to find a solution.”
The REC attributed the slowing job market to economic uncertainty resulting in businesses hesitating to commit to permanent staff. The report highlighted an increasing disparity between the availability of new job candidates and the number of permanent staff hires.
Sjuul van der Leeuw, CEO of Deployteq, part of Inspired Thinking Group, added, “As with all industries, marketing and technology are continuing to evolve at a rapid pace and we need skilled staff at the forefront.
“It is worrying to see the job market stall, especially at a time when many businesses are exploring technology implementation such as generative AI, yet lack the expertise to truly unlock the benefits.
“Businesses must find a way to redirect investment into staff, whether it’s filling vacancies or delivering training, as they are key to leading technology adoption, providing creative ideas, and ultimately helping businesses to grow.”
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