Record hiring surge proves welcome relief amid cost of living crunch

The record hiring surge in the UK jobs market is providing welcome relief amid a turbulent cost of living crunch this autumn. But big questions hang over the sustainability of pay growth through the winter, the Resolution Foundation said in response to the latest labour market figures.

The latest data showed another record increase in the number of payrolled employees – up 207,000 to 29.2 million. The current run of jobs growth still has some way to run though, with the employment rate of 75.3 per cent in the three months to August still 1.3 percentage points down on pre-pandemic levels, while over a million workers were furloughed during this period.

The widest measure of economic activity – hours worked – remains 2.7 per cent down on pre-pandemic levels in August, though this gap should be closed next month.

Another record month of job vacancies in the economy was also matched by a record hiring rates – 821,000 people started a new job in September – showing that despite some firms’ widely publicised struggles to recruit, hiring is very much taking place as the economy normalises.

Record vacancy levels and hiring rates in September also bode well for the million workers coming off furlough in October, says the Foundation, and should help limit any increases in unemployment.

The Foundation notes that’s while pay packets are rising far less than the 7.2 per cent headline pay figure, the ONS’ estimate that underlying pay growth has strengthened to between 4.1 and 5.6 per cent is encouraging.

With inflation set to hit 4 per cent over the winter and productivity rates low, the big question is how long this period of healthy pay growth will last – and whether it will be enough to prevent real wages from falling in the coming months.

Nye Cominetti, Senior Economist at the Resolution Foundation, said:

“With households across Britain facing a triple whammy of rising prices, energy bills and benefit cuts, the jobs market is providing some welcome relief amid a turbulent autumn.

“Record vacancies levels in September were matched by a record hiring surge, which should help formerly furloughed workers find work as a quickly as possible in October.

“But while encouraging, the UK labour market remains smaller than it was pre-pandemic. And though wage growth looks almost unbelievably strong right now, there are big questions over whether it will remain strong enough over the coming months to prevent real wages from falling this winter.”


Notes to Editors

For more information contact Rob Holdsworth on 020 3372 2959 or 07921 236 972.