Jeremy Hunt will be under pressure next week when he delivers his autumn statement to ease the burden on employers that find themselves bidding up wages because they cannot find the staff they need.
The latest employment figures show the number of vacancies declined in October, but not by much, indicating that businesses continue to advertise new roles without much success unless pay rates are improved.
While this is a boon for workers in those industries facing a skills shortage, the flipside is the likelihood that inflation will persist and interest rates will remain higher for longer, heaping further pain on renters and families with mortgages.
The Bank of England has made it clear that the number of vacancies – which fell by 58,000 to 957,000 in the three months to October from the previous three months – must fall further before it believes there is something approaching equilibrium in the jobs market. In the meantime, interest rates are likely to remain at the current 5.25% level.
Hunt knows that above all else, he needs to bring people back to work. One of his chief targets is the large number of people who cannot afford to work or take on extra hours while the price of childcare remains sky high.
During his budget speech in March, he announced a scheme to extend the government subsidy to all preschool children – from nine months old to the age of five – calling it the “biggest transformation in childcare in my lifetime”.
But it will only take effect next year and most childcare providers say it cannot be realised without more skilled staff to look after the extra children.
This criticism puts the focus on the government’s training schemes, which have been underfunded for more than a decade.
Tony Wilson, a director at the Institute for Employment Studies, said the neglect of training has denied many workers the skills they need to fill new roles.
He said extending access to employment programmes such as Restart for the 2 million people who are outside the labour force and want to work, was crucial, “as well as reforming the apprenticeships levy to allow more flexible, shorter-term help to support reskilling”.
Ben Harrison, the director of the Work Foundation thinktank based at Lancaster University, said those on low pay who also claim benefits needed greater support to take on more hours.
“The chancellor should resist calls to further increase benefit sanctions on some of the most vulnerable people in society – which the government’s own research suggests does not result in more people moving into work.
“Instead, the focus should be on improving the quality of jobs available and providing more tailored support for jobseekers with different needs.”
If only employers could find the staff they needed, they wouldn’t be forced to pay ever-higher wages. It’s a message Hunt wants to heed. Employers will be watching his autumn statement to see what support will be made available.
