Vacancies plummet to five year low in fresh blow to Burnham as the cost of workers holds back hiring

JOB vacancies have fallen to a fresh five-year low as small firms hold back from hiring due to soaring wage costs. There were around 8,000 fewer vacancies quarter on quarter in the three months to August, according to the Office for National Statistics (ONS). The 702,000 vacancies are the lowest level since spring 2021 and the lowest in more than a decade if the pandemic years are disregarded. Small firms have warned that ongoing pressures from rising wage bills are one of the factors holding them back from hiring staff. Sign up for the Money newsletter Thank you! Average weekly earnings growth remained unchanged at 3.5% in the three months to July. But it continues to outpace inflation, rising by 0.8% with the Consumer Prices Index taken into account. Meanwhile, total wage growth stood at 3.9%, down from 4.2% in the three months to June. This is a key figure that is used to calculate the triple lock and puts pensioners on track for a 3.9% increase in the state pension next year. The UK unemployment rate also remained unchanged at 4.9% in the three months to July. Liz McKeown, ONS director of economic statistics, said: “Payrolled employee numbers continue to edge down, with falls over the past year particularly evident in the retail and hospitality sectors. Most read in Money “Vacancies remain at their lowest level outside the pandemic period for more than a decade, with smaller businesses continuing to report that increased labour costs are affecting hiring decisions.” The figures follow Prime Minister Andy Burnham’s pledge to curb the number of jobless young people while he is in office. The prime minister said he is on a mission to halt the increase in the number of youngsters not in education, employment or training. The number of young people aged between 16 to 24 who are neither working nor learning surpassed one million for the first time since 2013 to reach 1.01 million in the three months from January to March. Meanwhile, an interim report published by former Labour minister Alan Milburn in May warned the figure could climb to one in six by 2031. Work and Pensions Secretary Pat McFadden said the ONS figures “show a labour market that remains resilient in the face of significant global economic pressures”. “But we know there is more work to do, particularly to ensure young people gain the skills, experience and confidence needed to succeed,” he added. The figures come ahead of the interest rate decision on Thursday, with policymakers expected to vote to hold at 3.75%. Thomas Pugh, chief economist at RSM UK, said that despite ongoing weakness, the statistics show signs of stabilisation in the jobs market, which may give the Bank room to increase rates to combat inflation in the coming months. He said: “The Monetary Policy Committee (MPC) has so far relied on the weakness of the labour market as cover for keeping rates on hold, but that position looks increasingly difficult to hold if the labour market stabilises and inflation rises to around 4%. “We still expect the MPC to hold rates on Thursday, but a rate hike as early as November is now looking much more likely.” Comment now