Status: 01/18/2022 2:39 p.m
Dhe British economy remains on course for recovery, as the current labor market report shows. The country continues to struggle with a shortage of skilled workers rather than unemployment.
The labor market in Great Britain remains in good shape. A further fall in the unemployment rate and a high number of vacancies show that the British economic recovery is also increasing the demand for labour.
Back to pre-corona level
In the current reporting month of November, the unemployment rate fell from 4.2 percent in the previous month to 4.1 percent, as the statistics office ONS announced on Tuesday in London. This also surprised analysts positively. They had counted on a constant quota. “Today’s numbers are proof that the labor market is thriving,” Finance Minister Rishi Sunak said in a first reaction.
Employment in the UK is rising steadily and has exceeded pre-corona levels again in all regions. However, the shortage of workers, which is not only a consequence of the pandemic but also of Brexit, has worsened and is even weighing on growth. The number of vacancies reached a new record of 1.247 million. That’s 462,000 more vacancies than before the pandemic.
In the service sector in particular, companies are finding it difficult to find new workers. The reluctance of employees in sectors that are particularly affected by the corona pandemic also plays a role.
Moderate wage settlements
Wage growth moderated further, but remains strong on a longer-term basis. “Few companies appear to be raising wages significantly in order to retain their employees,” said analyst Samuel Tombs of analysis house Pantheon Macroeconomics. The expert expects wage growth of 3.5 percent for 2022. Including bonus payments, wages increased by 4.2 percent, excluding bonuses they increased by 3.8 percent. In the summer, the increase was more than eight percent. This also reduces the risk of inflation, because sharply rising wages increase the risk that inflation, which is already high, will become entrenched.
Concerns about labor shortages and medium-term wage pressures were a key reason why the Bank of England (BoE) became the first of the leading central banks to hike interest rates in December for the first time since the pandemic began. The key monetary policy rate climbed from 0.1 to 0.25 percent. Financial markets see a more than 80 percent chance that the central bank will hike rates further at its next February 3 meeting.
International labor market struggles with the consequences of the pandemic
In international comparison, the British labor market is in a good position. The International Labor Organization (ILO) expects the global job markets to recover more slowly than previously expected. In 2022 as a whole, around 52 million full-time jobs would be lost as a result of the corona pandemic, said ILO Director-General Guy Ryder yesterday when a new report was published. So far, the ILO had assumed that 26 million full-time jobs would be lost in the current year. As a reason for the pessimism, Ryder cited the emergence of new virus variants such as Omicron, which contribute to increased uncertainty in the economy and prevent job creation. Global unemployment will remain at a level above the pre-Corona period at least until 2023.