London (Parliament Politics Magazine) – The unemployment rate rose to 4.3% in the UK during the three months before September, marking ongoing issues in the job market.
Official reports signal a rise in the UK’s unemployment rate indicating a slowdown in pay growth. Data reveals that joblessness rose to 4.3% during the past three months ending in September, up from 4% in the previous quarter.
The ONS had advised caution with its job market due to data collection issues, separate figures indicate signs of weakness. Payroll numbers dropped by 9000 this quarter while job vacancies fell for the 28th month reaching their lowest point since 2021.
Director of ONS economic statistics, Liz Mckeown, highlighted that the total remains slightly above pre-pandemic levels. She talked to the BBC programme and said that the new figures suggested there was a “continued easing of the labour market”.
In a further sign of a weakness in the jobs market, annual growth in employee’s average regular earnings in Britain excluding bonuses slowed to 4.8% in the three months to September, down from 4.8% in August.
The rate of pay growth is highly above the inflation which reduced to 1.7% in September. Including bonuses pay growth also rose from 3.8% to 4.3%.
Matthew Percival from the CBI lobby group said, “The labour market continues to split with signs of employers’ weakening intentions to hire at the same time as a welcome fall in inactivity”.
He added, “These figures come against a backdrop of rising concern about spiralling employment costs which are set to increase following last month’s NICs rise, the employment rights bill and the latest increase in the national living wage”.
Following the government’s budget announcement, which includes a rise in employer national insurance contributions (NICs), businesses have raised concerns with many warning that the tax-increased burden could lead to job cuts. The government is also facing pressure from industries.
Bank of England is closely observing the data of jobs when making decisions on interest rates.
It reduced rates for the second time this year last week with inflation falling to 1.7% below its 2% target.
According to Ms McKeown, the ONS is aware of the impact its data issues are having on the central bank and making efforts to resolve the problem as soon as possible.
Anecdotal reports back the latest ONS data, suggesting that some businesses already facing rising costs paused hiring ahead of the budget.
Supermarkets such as Asda and Sainsbury’s along with High Street retail giants Marks and Spencer have said they are facing significant cost increases following the rise in National insurance contributions (NICs) and the minimum wage hikes measures announced in Chancellor Rachel Reeve’s first budget.
Principal policy adviser for employment at the Institute of Directors, Alexandra Hall-Chen said that the measures included in the Employment Rights Bill, along with the tax increases were “taking a serious toll on hiring intentions”.
She added, “The cumulative effect of these changes will ultimately be to stifle job creation… [the government] needs to urgently address business’ concerns about the increased risks and costs associated with employing staff”.
Wendy Jones-Blackett, from Chapel Allerton, near Leeds professional in designing and crafting handmade greeting cards.
She told the BBC that even though her business is small and has seven employees, she believes her business would also be affected by the government budget decision.
She added, “The thing that we’re having to build in is that their costs are going to go up – their services and the things that we buy”.
“It is going to make us question pay rises – if you want to retain good staff, you want to increase their pay. We want to do that but we’ll have to temper that with rising costs”.
Chief UK economist at Pantheon Macroeconomic, Rob Wood, insisted that the Bank of England would focus on broader trends rather than “small data misses” by the ONS.
Further, he added, “Unemployment is likely gradually rising, the labour market is loosening but it remains tight. Similarly, wage growth is gradually slowing but remains too high still to deliver inflation sustainably at target”.