UK unemployment reaches 4.4%, fastest of OECD countries – London Business News | Londonlovesbusiness.com

UK unemployment has reached 4.4 per cent, with a cooling labour market and high wage growth set to plague the incoming government, according to the Office for National Statistics (ONS).

The figures revealed that the number of unemployed people rose by 138,000 between February and April, taking the total number of unemployed people to over 1.5 million in the UK, lifting the unemployment rate to 4.4 per cent.

The current rate, coupled with high wage growth, dampens hopes of an early interest rate cut by the Bank of England who are looking for evidence of inflationary pressures easing up.

It leaves UK unemployment rate increasing at the fastest rate among 38 of the world’s richest countries, according to a Trades Union Congress (TUC) analysis. This data, covering the first three months of the year, highlights a troubling trend ahead of the upcoming general election.

Michael Thornton, senior director, public sector at Investigo, part of The IN Group, said, “The uncertainty caused by the upcoming general election has complicated the job market, taking the focus away from long-term planning and more towards campaigning.

“To stabilise across both the public and private sectors, the incoming government needs a defined, achievable plan for employment, driven by smarter investment, more transparency and more considered decisions.

“Hiring cyber and AI staff is a struggle for many businesses, according to our Tech and the Boardroom research, and the incoming government needs to work with these companies to reach new talent pools, support hiring schemes and facilitate digital skills training. Investing in people should be a constant, ensuring employment levels are high and unlocking the power of people through their unique skill sets.

“It’s also important for cost-of-living to continue to reduce, but the rate of wage rises is putting interest rate cuts into question. Ideally, this could be solved by a mixture of major capital investment and smarter worker savings, which allow resources to be re-diverted and wages to steady.

“Organisations need to make work more than just about pay, offering other aspects such as career progression, flexible workplace policies, career mentoring and an inclusive and supportive culture to make staff feel welcomed and valued, acting to both attract and retain employees while keeping wage growth stable.”

Every region in the UK is experiencing rising unemployment and fewer job vacancies. The TUC attributes this to a dislocation in the labour market, where employers are struggling to find workers with the right skills despite the increase in joblessness.

Although the UK economy has started to increase again, growing by 0.6% in the first quarter of the year with consumer and business confidence rising, many employers are planning to cut jobs and impose hiring freezes, highlighting a significant issue remaining in job security.

A recent survey by the CMI of nearly 1,000 British managers revealed that 35% of organisations plan to either freeze (21%) or cut back (14%) on hiring over the next six months. In the same period last year the combined total was 24%, while in the summer of 2022 it was just 15%, indicating a rising trend in the number of employers wanting to restrict or cut numbers of staff.

The survey also explored the reasons behind these hiring restrictions. Sixty percent of managers cited declining revenues or rising costs, 55% pointed to organisational restructuring aimed at cost reduction, and 34% attributed their decisions to increased economic uncertainty.