Britain’s post-pandemic high-vacancies era ends as pay growth continues to weaken

Britain’s three-year period of high vacancies has ended, with vacancy rates now back to pre-pandemic levels in both the private and public sectors, while pay rises continue to slow as a result, the Resolution Foundation said today (Tuesday) in response to the latest labour market statistics.

The latest data shows vacancy levels falling again, as they have done in all but one of the last 29 months, reaching 831,000 in the three months to October 2024. Vacancy rates (the proportion of jobs which are unfilled) are now below pre-pandemic levels overall.

There were further signs of the jobs market cooling, with the number of payrolled employees falling slightly by 5,200 in October. There has been no growth in payrolled employment for the past six months, says the Foundation, following a strong start to the year.

The cooling jobs market continues to reduce wage growth across Britain. Average regular weekly earnings in the year to September grew by 4.8 per cent in the private sector (down from 5.3 per cent in the previous quarter), and by 4.7 per cent in the public sector (down from 6.0 per cent in the previous quarter. The Foundation notes that public sector pay growth is set to rise in coming months as a result of the latest pay settlements that are yet to feed through into the data.

However, with inflation falling over this period, real regular wages continue to grow by a healthy 1.9 per cent across the economy.

The Foundation cautions that the headline data on employment, unemployment and inactivity carry a health warning and do not reflect the current state of the labour market.

Nye Cominetti, Principal Economist at the Resolution Foundation, said:

“The continuing cooling of the jobs market has finally brought an end to Britain’s post-pandemic high-vacancies era. This period has contributed to strong wage growth and has likely boosted employment too – though this has failed to be picked up by our problematic official data.

“But now that the era has ended, pay packets will continue to cool and Britain will need to renew efforts to get employment up again.”