The number of workers on UK employers’ payrolls dropped for the first time in two years last month amid signs that the flatlining economy has started to take a toll of Britain’s labour market.
Fresh figures from the Office for National Statistics showed a 136,000 fall in employees between March and April – the first reduction since February 2021.
Although the ONS said the data was provisional, the numbers on payrolls provide the most timely guide to the state of the jobs market and will be seen as evidence of a cooling in demand for labour. Despite April’s fall, payrolls are more than 800,000 higher than they were in February 2020, the month before the UK went into its first Covid-19 lockdown.
The official figures showed employment and unemployment up in the first three months of 2023. With the cost of living crisis hitting household budgets, there was a record flow of people out of inactivity and into work. The unemployment rate rose unexpectedly to 3.9% from 3.8%.
Job vacancies fell by 55,000 to just over 1m in the three months ending in April, the 10th consecutive quarterly drop. The number of people inactive as a result of long-term sickness reached a fresh record of 2.55 million.
The ONS director of economic statistics, Darren Morgan, said: “Employment and unemployment both rose again in the first three months of 2023, driven in particular by men. This means the number of those neither working nor looking for work continues to fall, although the number of people not working due to long-term sickness rose again, to a new record.”
Despite the highest pay growth in the public sector for two decades, the ONS said workers in public and private sectors were becoming worse off because prices were rising faster than wages. Average regular pay growth for the private sector was 7.0% and for the public sector was 5.6% in January to March, but the cost of living rose by 10.1% in the year to March.
Meanwhile, the number of days lost through strikes rose from 332,000 in February to 556,000 in March, with 80% of the total the result of action in the health and education sectors.
Kitty Ussher, the chief economist at the Institute of Directors, said: “A combination of high costs and cash-strapped consumers is now causing some businesses to hesitate before hiring, uncertain as to what the future holds.”
Chris Thomas, the head of the Commission on Health and Prosperity at the Institute for Public Policy Research thinktank, said: “More people are now out of work due to ill-health than any other time since records began. This is a damning indictment of this government’s record on our health. Long-term sickness is fatally undermining our economy and holding back people’s ability to live long, happy and prosperous lives.”
Jeremy Hunt, the chancellor of the exchequer, said it was “encouraging” that the unemployment rate remained low at 3.9%, despite the 0.1-point rise in the three months to March.
