Despite economic growth, the UK’s job market has not fully recovered from the pandemic, with job vacancies falling by a fifth over the past year.
According to Adzuna, a job search site, the number of open roles in Britain dropped to 852,703 in June, representing a 0.2% decline over the past month and a nearly 20% decrease compared to last year.
The cautious approach by businesses towards hiring is attributed to high interest rates and weak consumer spending. The Bank of England has increased its base rate to 5.25%, a 16-year high, which has strained household and business finances.
Andrew Hunter, co-founder of Adzuna, noted, “The positive economic growth recorded in the first two quarters of the year has yet to filter through to hiring. Businesses may have paused their hiring plans due to the general election, but hiring is down nearly a fifth across the UK, indicating that the job sector has not fully recovered from the Covid pandemic.”
The Office for National Statistics reported a 0.7% GDP growth in the first quarter of this year, the fastest among the G7 countries. However, the weak job market is expected to prompt speculation that the Bank of England might reduce borrowing costs for the first time in four years. The financial markets currently see a 50% chance of this happening.
The Bank’s monetary policy committee has stressed that wages must stabilise and the labour market must rebalance before considering any rate cuts. Adzuna’s data shows 1.95 jobseekers per vacancy, the highest ratio in three years, which often suppresses wage growth. Average starting salaries increased by 2.72% from June 2023, reaching £38,843.
Demand for workers is strongest in professional services, with legal sector vacancies rising by 8.46% and PR roles up by 3.78%. Conversely, vacancies in hospitality and catering dropped by 5.32%, and healthcare and nursing roles fell by 4.16%.
Cambridge tops the list for jobseekers with the lowest ratio of candidates to roles at 0.35, followed by Guildford and Exeter. Bradford remains the most challenging city for job hunters.
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UK job vacancies drop by 20% despite economic growth