Labour market update – September 2023

The latest ONS statistics from May to July 2023 show increasing signs of softening in the labour market. The employment rate has decreased, while unemployment and inactivity rates have risen. And it’s the first quarter in more than a year that vacancies have fallen below a million.

Those inactive because of long-term sickness increased to another record high. Positively, those inactive because they were looking after family or home decreased to a record low. The importance of getting people who want to be in work, back into work helps explain why the CBI focused its policy asks at the Spring Budget on childcare funding and workplace health incentives. This issue continues to be a priority for our work, as the labour market still remains tight and labour shortages have a big impact on our members.

In better news, growth in regular pay was 7.8% in the quarter to July 2023 – the same as the previous 3-month period and the highest regular annual growth rate since records began in 2001. Wages outpacing the rate of inflation is good news to households struggling with the cost-of-living crisis but for these increases to be sustainable in the long run measures to boost investment and productivity are critical.

It's why we’re continuing our call, on behalf of our members, to turn the Apprenticeship Levy into a broader Skills Challenge Fund. It will allow firms to spend their training budgets in a more flexible way helping businesses to give workers the skills they need.

In the meantime, understanding the latest labour market statistics is one way to help manage continued labour shortages.

Download the full Labour Market Update for more analysis on:

• The topline figures on employment and inactivity rates
• Pay growth trends both in the private and public sector
• And how the picture varies across the regions and nations of the UK