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14th November 2023

Labour market cooling but no respite for business

The ONS has released the latest labour market data which includes employment and unemployment rates, economic inactivity and vacancies.

Paul Butterworth, CEO at Chambers Wales South East, South West and Mid, said:

“Today’s data shows that the labour market has remained largely unchanged in the last quarter: the UK’s unemployment rate remains at 4.2%, the economic inactivity rate stayed at 20.9% and the employment rate had a minimal fall of 0.1%.

“As vacancies continue to fall and the labour market shows signs of cooling off, employers are still struggling with higher cost pressures due to wages rising quicker than inflation and the ongoing skills shortage.

“67% of businesses in Wales stated in our Quarterly Economic Survey for Q3 that their business was under pressure to raise its prices because of labour costs. A third of Welsh businesses reported that they are currently struggling with wage inflation stifling growth and over a quarter cited wage inflation as the biggest barrier to growth for their business in relation to skills.

“Skills shortages and a hesitancy to invest in training opportunities due to cost pressures can inhibit businesses’ plans for growth. Policymakers need to understand the challenges businesses in Wales are facing and do more to help businesses invest in training and upskilling opportunities to attract and retain employees.”

Jane Gratton, Deputy Director of Public Policy at the British Chambers of Commerce, said: 

“There are clear signs of a cooling off in the labour market, with vacancies continuing to trend downwards and unemployment remaining static.

“But employers are still struggling, as wages continue to outpace inflation and the impact of 14 consecutive interest rate rises starts to bite. It is also a concern that the flow of inactive workers back into employment appears to have stalled.

“A thriving economy needs a skilled and flexible workforce in every region and sector. That’s why the UK Government and employers need to invest now to address the skills shortages that are holding everyone back.

“The Chancellor must use the Autumn Statement to help businesses boost their investment in high quality training. It is also essential that everyone who wants to work can access the healthcare and support they need to thrive in employment.”

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