Labour market continues to 'constrain growth'

This comes as figures from the Office For National Statistics (ONS) released today (Tuesday 18 April), showed vacancies in the accommodation and food service sector were 56.9% up compared with January to March 2020.

However, they were 2.2% down vs the previous quarter.

In a social media post shared on Twitter, Nicholls said: “Labour market still incredibly tight with over 1m vacancies across economy and 140,000 in hospitality.

Constrain growth 

“While good to see numbers looking for work exceeding vacancies - and we welcome Government efforts to support people into jobs - it is clear labour shortages continue to constrain growth.

Labour market still incredibly tight with over 1m vacancies across economy & 140,000 in hospitality. While good to see nos looking for work exceeding vacancies - and we welcome govt efforts to support people into jobs - it is clear labour shortages continue to constrain growth https://t.co/LtyxFCr58n

— Kate Nicholls OBE (@UKHospKate) April 18, 2023

The data from ONS showed the UK unemployment rate was estimated at 3.8%, 0.1 percentage points higher than the previous three-month period and 0.2 percentage points below pre-pandemic levels.  

Comparatively, the UK employment rate stood at 75.8% during this time, which was 0.2 percentage points higher than the previous three-month period and 0.8 percentage points lower than before the pandemic.

In addition, the economic activity rate for people aged 16 to 64 was estimated at 21.1%, 0.4 percentage points lower than the period before and 0.9 percentage points higher vs pre-pandemic levels. 

The number of vacancies across all sectors between January and March 2023 stood at 1,105,000, which was a decrease of 47,000 from compared with October to December 2022.

In addition, vacancy numbers fell on the quarter for the ninth consecutive period during this time, down 4% compared with previous estimations, with vacancies falling in 13 of the 18 industry sectors.

Total vacancies were down by 188,000 vs last year’s levels, though they remained 304,000 above pre-pandemic levels (January to March 2020).

Curb output 

Between December 2022 and February 2023, the number of unemployed people per vacancy was up from the previous quarter at 1.2.

ONS said the data reflected “uncertainty” across all industries as survey respondents “continue to cite economic pressures”.

The data also showed total pay, including bonuses, grew 5.9% year-on-year during the three months to February, while regular pay growth stood at 6.6%, compared with the current 10.4% inflation rate.

Nicholls’ post continued: “Going into our busy summer season, [these figures] mean hospitality, tourism, wedding and catering businesses are having to curb output, occupancy and hours due to labour shortages.

“We estimate we could generate £25bn extra revenue - earning the Treasury £7bn in tax for public services.”