REC response to ONS labour market figures, September 2023

The ONS has published its latest labour market statistics this morning. Neil Carberry, REC Chief Executive, said:

“Pay rising to meet falling inflation is a function of firms giving higher pay awards to staff in the spring, ongoing staff shortages in some sectors such as hospitality and logistics, and a big rise in the minimum wage. It was always likely that pay would meet falling inflation during this year, but we should be cautious of any analysis that suggests pay is driving rising prices at this stage – businesses have been carefully managing looking after workers and maintaining cost stability.

“Today’s numbers do suggest that the path to lower inflation may be more of a slope than a cliff, but there is evidence of the gentle cooling in the jobs market the Bank of England has been seeking. With employment and hours dropping a little alongside inflation, wage pressure in the private sector is not likely to be as high from here on in as the labour market loosens. While we are coming off the hiring peaks of 2022, however, we are still seeing shortages in some key sectors such as hotels, restaurants, logistics, manufacturing, engineering, and healthcare. This is a longer-term issue and left unaddressed will drive inflation up. Companies can address shortages in how they choose to hire, working with recruitment professionals to reach new pools of candidates or engage staff in new ways. It is telling that temporary labour remains in demand through this period of economic uncertainty, for instance.

“For government, a growth plan that helps firms make the most of our labour force and invest in new technology is overdue. Across skills, infrastructure, welfare support, immigration, and business support – the case for a comprehensive reform to get growth going has never been stronger.”

Ends

Notes to editors:

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