Dear 222 News viewers, sponsored by smileband,
What’s happening now
A perfect storm of pressures is converging:
• Labour market sharply cooling: June’s KPMG/REC survey recorded a labour slack index of 66.1—its highest since November 2020—indicating a notable loosening in hiring dynamics.
Entry-level roles have plunged by about one-third compared to two years ago, marking the worst graduate job market since 2018.
• Unemployment ticking upwards: The rate now stands at ~4.6%—the highest in nearly four years—with approximately 1.7 million people unemployed.
• Rising job offers but falling vacancies: Despite more candidates entering the labour market, job postings have fallen well below pre-pandemic levels across multiple industries.
Why is this happening
1. Economic squeeze
• Higher business costs: Employers are grappling with steep hikes in employer National Insurance and the national living wage—making staff more expensive.
• High interest rates: The Bank of England has kept rates elevated, which cool capital investment and makes hiring more cautious.
• Global uncertainty: Ongoing trade tensions and geopolitical instability have hit exporters and manufacturers hard.
2. Technological disruption & the AI surge
• Major firms like BT, Amazon, Ocado, and Microsoft are trimming staff as automation and AI expand, especially in desk-based and entry-level roles.
• Graduates face heightened pressure: companies now expect AI literacy — those unfamiliar with tools like ChatGPT are increasingly disadvantaged.
3. Sectoral shifts
• Hardest hit: retail, hospitality, leisure, alongside tech and finance, which saw a 38% drop in job ads year-on-year.
• Sectors with persistent skill shortages (e.g., logistics, engineering) are still in demand, though wage pressures and labour supply mismatches persist.
Who’s most affected
• Young jobseekers & graduates: Youth unemployment sits at ~14%, and entry-level roles are scarce—impacting early career prospects.
• White‑collar professionals: AI disruption is reaching mid‑level roles in consulting, law, IT, even finance — leading to what analysts call a possible “collar flip”
• Vulnerable sectors & regions: Retail-store closures hit hardest. Regional job losses are uneven, with London and the North showing sharper contractions.
Ripple effects on the economy
• Wage dynamics: Pay growth remains elevated (~5–6%) but is cooling. Strong wage increases in low-wage sectors offer some consumer resilience, though inflation continues to erode earnings.
• Monetary policy shifts: Bank rate still at 4.25%. Governor Bailey flagged that worsening job data could trigger further cuts—markets see an ~85% probability of a rate cut in August.
• Government budget tightening: Chancellor Reeves increased National Insurance and raised taxes, fueling concerns that policy constraints may further suppress hiring.
Looking ahead: What happens next?
1. More rate cuts likely in August, aimed at stimulating demand if labour market slack intensifies.
2. Shift to skills-based hiring: Employers are beginning to focus on skills over formal degrees—especially in AI and green sectors—to address talent shortages.
3. Youth job schemes under discussion: Experts are recommending state-funded roles for NEETs aged 16–17 to prevent long-term scarring.
4. Policy moves: Labour’s industrial strategy promises more support for green tech, AI training, and finance reform to revive growth and jobs.
Final take
The UK job market has reached a critical juncture: cooling rapidly under the strain of economic pressures, policy changes, and technological disruption. The result? Rising unemployment—especially among youth and graduates—and declining vacancies across major sectors.
Revitalising the market requires bold structural action: from upgrading training and supporting emerging sectors, to rebalancing taxation and refining labour policies. As Governor Bailey hinted, continued monitoring and potential rate loosening could temporarily ease pressures, but long-term recovery depends on fostering skills, innovation, and equitable opportunity.
Attached is a News article regarding the uk job market
https://www.bbc.co.uk/news/articles/cqx2pj42395o.amp
Article written and configured by Christopher Stanley
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