The recent rise in minimum wage has led to significant cuts in summer job hires. Employers across key sectors are feeling the pinch. This article delves into the broader implications.
Impact on Seasonal Hires
New figures show a notable reduction in seasonal job hires. The Recruitment and Employment Confederation (REC) reports a sharp decline in job postings for summer positions in sectors like hospitality, tourism, and construction. This reduction is linked to the recent minimum wage hike.
Labour Shortages
Labour shortages continue to affect the economy. The manufacturing sector, represented by Make UK, still faces challenges in hiring skilled workers. Although recruitment intentions have grown, the shortage remains a hurdle for expansion.
Wage Growth and Inflation
The rise in minimum wage has contributed to overall wage growth. Official figures show a 6% increase in wages over the three months leading to April.
The Bank of England highlights that sustained wage growth complicates efforts to reduce inflation. Its monetary policy committee is likely to keep the base rate steady at 5.25% this week.
Job listings have declined overall. The REC data reveals a 0.7% drop in job postings in the last month, signalling a cooling labour market.
Sector-specific Declines
The hotel and accommodation sector has seen a massive reduction. Job postings fell by 45% in April and May compared to the previous year.
Restaurant and catering roles have also suffered, with a 38% decline. Chef and cook positions decreased by 33%.
Tourism and event roles are also affected. Reductions were noted across most regions during the same period.
Employer Strategies
Companies are trying to manage rising wage bills. Neil Carberry, CEO of the REC, explains that some firms are reducing employee hours or opening for shorter periods to counteract wage increases.
Carberry said, ‘Reducing hours or roles while opening for shorter periods are all decisions that firms may feel forced to make in tough times.’
Manufacturing Sector Resilience
Despite challenges, the manufacturing sector shows signs of recovery. According to Make UK, output has increased, moving from a balance of 5% to 9% in the second quarter.
Projections indicate a 30% rise in output for the three months to September. Factors like falling inflation, energy prices, and interest rates are contributing to this recovery.
Broader Economic Trends
Overall job listings across the economy fell by 0.7% last month, totalling 1.7 million. New job listings dropped by 1.1% between April and May, according to the REC.
The cooling labour market reflects broader economic challenges. Employers are cautious due to rising wage costs and labour shortages.
The minimum wage increase has undeniably impacted the labour market, particularly in seasonal job hires. Employers are adopting various strategies to manage rising costs.
Despite these challenges, some sectors like manufacturing are showing resilience, suggesting a complicated yet dynamic economic landscape.