REC response to ONS labour market figures, March 2023

The ONS has published its latest labour market update this morning. Commenting on the statistics, Kate Shoesmith, Deputy Chief Executive of REC, said:

 “Unemployment remains historically low, with vacancies well above pre-pandemic levels and economic inactivity still above the pre-covid rate – so there is plenty of work to be done by the Chancellor tomorrow. It is encouraging that pre-Budget signals from the Treasury will use some of the levers available to Jeremy Hunt to address these issues - nowhere is it more needed than in better, more affordable childcare support.

“Our analysis shows that labour and skills shortages could cost the UK economy up to £39 billion per year from 2024 - around the same as two Elizabeth lines. Government and business must reach out and help those furthest away from the labour market into work if we are to fill new job vacancies - which our own data shows hit a 14-month high in February.

“Firms can also step up on how they employ and engage. The government can help business by taking the big opportunity in the Budget tomorrow to provide clarity and stability on its growth plans. It is a big test for the Chancellor on skills, transport and tax. We need to see creative and revitalised policies on tackling economic inactivity, from rethinking low-skilled immigration policy to support for the over 50s.”

Ends

Notes to editors:

Overcoming shortages - How to create a sustainable labour market – July 2022. In this report, we show exactly how much damage could be done if we don’t step up. With a 10% surge in demand for staff across the economy, and the labour market restricted by shortages, we could see a 1.2% fall in expected GDP and productivity by 2027 – costing the economy anywhere between £30 billion and £39 billion every year. This figure is just short of the entire current defence budget, or two whole Elizabeth Lines.

Labour Market Tracker: New job ads hit a 14-month high as businesses still need to hire – February 2023.

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