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UK unemployment falls, but wages outpace inflation

  Unemployment in the UK fell to a near 50-year low in the first quarter of 2022, with vacancies outnumbering the number of unemployed for the first time ever. But at the same time, when adjusted for inflation, workers’ fixed wages fell by the most in nearly a decade.
Job market ‘mixed’

  Data released by the Office for National Statistics on May 17 showed that as of the end of March this year, the UK unemployment rate fell to 3.7% from 3.8% in the previous quarter, which was the lowest level since December 1974.
  From January to March 2022, the number of unemployed in the UK was 1.257 million, and from February to April of the same year, there were 1.295 million vacant jobs in the UK.   Darren Morgan, director of economic statistics
  at the ONS, said: “This is the first time that vacancies have exceeded the number of unemployed since we started counting the relevant data.”
“Mixed good and bad”.
  Today, when inflation is soaring in the UK and the cost of living crisis is becoming more and more serious, the meanings of “good” and “bad” in the “mixed” job market will also be interchanged. It’s a “good thing”, but it will also further stimulate inflation.
  One of the reasons why the number of vacancies in the UK exceeds the number of job seekers is that many people were either passively unemployed or voluntarily resigned during the two-year new crown epidemic. As the British government lifted most of the epidemic prevention and control measures, the British economy gradually recovered. After the recovery from the epidemic, many companies have a large number of vacancies and are eager to recruit people.
  Another reason is that despite the drop in the UK unemployment rate, the overall UK workforce is still smaller than it was before the coronavirus pandemic, as large numbers of Britons are neither working nor looking for a job.
  The latest data from the Bureau of Statistics shows that the UK employment rate rose to 75.7%, up 0.1 percentage points from the fourth quarter of 2021, but still 0.9 percentage points lower than at the beginning of 2020. In other words, the UK still has a large number of economically inactive people, This added to the pressure on the tight labor market.
  Economics treats the unemployed and the economically inactive population differently. Those who have lost their jobs but are actively looking for work are considered unemployed. Those who are not actively looking for work at all (this includes those who may have given up their job search), or who are in the process of contemplating starting their own business, are considered “economically inactive”, i.e. Economically inactive population.
  New figures show that many people who were previously ‘economically inactive’ are now being forced to become ‘active’ as a result of the cost of living crisis, joining the ranks of jobseekers, but the economically inactive population still reaches five years high (21.4%).
  In addition, the pressure of life has also forced many low-wage employees to change jobs in an attempt to increase their income by changing jobs.
  The Office for National Statistics said the total number of such people switching jobs rose to 994,000 in the first quarter of this year, a record high. In particular, the agency noted that the driving factor for changing jobs was voluntary resignation, not being fired. In other words, the vast majority of these people are active “job-hoppers” looking for a raise.
The race to raise prices and raise wages

  The Bank of England has warned that staff shortages could force companies to raise wages to attract talent, exacerbating an already high inflation situation.
  Prices have soared. In order to attract new employees and retain old employees, companies need to raise wages, which has added fuel to the fire of inflation, but according to the latest statistics, the race between price increases and salary increases is on the rise. The salary still outpaces the price.
  Figures released by the Office for National Statistics on May 17 showed that real fixed wages (that is, wages adjusted for inflation and excluding bonuses) fell by 1.2% in the first quarter of this year, the biggest drop since 2013. .
  These latest figures underscore the scale of the challenge the Bank of England faces as it tries to rein in soaring inflation. In March 2022, the UK consumer price index (CPI) rose by 7%, the highest point in 30 years, and the CPI increase in April may exceed 9%. On May 16, Bank of England Governor Andrew Bailey admitted frankly that he was powerless to prevent UK CPI inflation from reaching 10% by the end of the year.
  Bailey also said high earners should “think twice” before asking their bosses for a big raise this year, as rapid wage growth could spur faster and longer inflation.
  But Bailey’s remarks were strongly criticized by the union. The last thing workers should do during Britain’s worst cost-of-living crisis in generations is to “think twice before asking their boss for a pay rise,” said TUC deputy secretary Paul Nowak. Row”.
  Generally speaking, an increase in employment is a good thing for the British economy, but whether the trend of employment increase can continue for a long time is a more critical factor: in the race between wages and prices, who can finally run first.
  If people’s real income continues to shrink, they will not dare to let go of their courage to consume, which will in turn bring downward pressure on the economy. If the economic environment is not good, companies will also be dragged down, and they may eventually have to cut wages or even lay off employees.
  It is based on this concern that the Confederation of British Industry, the largest employer group in the UK, issued a call on May 16 for the British government to provide immediate financial support to the British people most affected by the cost of living crisis, while at the same time. Provide additional assistance to companies to encourage business investment.
  The call by the Confederation of British Industry comes on the same day that Ipsos, a pollster, released its latest survey on the cost of living crisis in the UK: 27% of Britons have to eat fewer meals to save money , 65% of Britons do not turn on the heater when they need it, 44% of Britons switch to a cheaper supermarket, 52% of Britons reduce the number of times they go out to socialize, and 44% of Britons reduce their driving. Three-quarters of respondents felt the UK government was not doing enough to help the underprivileged during the cost of living crisis.
  Also on the same day, parties and groups, including the opposition Labour Party and major trade unions, asked the Conservative government to launch an emergency budget to help ordinary British workers and the underprivileged who were hit by the cost of living crisis.
  Frances O’Grady, secretary general of the Trade Union Confederation (TUC), said: “The UK government failed to act at the height of the crisis. Cabinet dignitaries must now stop hesitating and return to Parliament with an emergency budget. We urgently need a windfall tax on oil and gas companies and energy subsidies for struggling households. We need appropriate increases in welfare and minimum wages to put money in the hands of ordinary consumers and fuel the British economy.”

A golden year for college graduates to look for jobs?

  However, Samuel Thomas of consultancy Pantheon Macroeconomics said the undersupplied labour market in the UK should “gradually improve” over the rest of the year, reducing pressure on wages to rise.
  First, there will be an increase in jobseekers among immigrants, Thomas pointed out, because now that all the barriers to immigrant employment related to the new crown epidemic have been eliminated, the number of businesses that have immigrant employment sponsorship licenses will greatly increase, reaching the level of the government. There will also be an increase in the number of jobs at the minimum wage threshold for immigrant employment; secondly, although the number of college graduates who have been out of work after graduation during the new crown epidemic once surged to very high levels, these seniors who have not been able to find work in the previous two years. Graduates, and new graduates graduating this fall, will enter the workforce one after another, improving the workforce shortage.
  Some even argue that 2022 should be a golden year for college graduates to apply for jobs, given that there are now more job openings than job seekers.
  Recent figures released by a number of organisations show that the UK job market has been in very high demand for university graduates.
  A report published in April by Universities UK found that by the end of 2020, there were nearly 1 million more job vacancies than there were job seekers among university graduates.
  But during the new crown epidemic, the problem of youth unemployment in the UK is the most serious. What’s going on here?
  One reason is that the Covid-19 pandemic has not only led to the closure of a large number of businesses and the unemployment of employees, but the lockdown measures that had to be taken to control the epidemic have also severely limited the ability of young people to find jobs.
  Although many college students are “unemployed after graduation” during the new crown epidemic, their unemployment may be more caused by the epidemic control measures or the temporary freezing of recruitment plans by enterprises, rather than reflecting the real supply and demand situation. In fact, the new crown epidemic has distorted The UK job market has exacerbated this supply-demand mismatch.
  Another reason is that the emergence of the new coronavirus and various mutant strains has made the previously uncertain economic outlook even more uncertain. In times of uncertainty about the economic outlook, young people are often the last to be hired and the first to be fired, and between experience and youth, companies tend to prefer the former. This still does not reflect real business demand for college graduates.
  Recent figures released by the Institute for Student Employers show that demand for university graduates from UK employers remains high during the Covid-19 pandemic. The association said the number of graduate job vacancies is now 20 per cent higher than it was before the 2019 Covid-19 pandemic.
  Many institutions expect the number of UK graduate vacancies to rise further in 2022 than in 2021.
  Universities UK president Steve West said: “While there are doubts about the value of graduate skills, the latest figures show that there is a huge demand for graduates from UK companies. This demand is increasing every year. Growth, and will continue to grow in the future.”
  Indeed, as the UK lifts virtually all containment measures, business demand for university graduates will only increase unabated.
  In view of the current shortage of domestic university graduates in the British job market, the British government is even prepared to seek “foreign aid”.
  The UK government is reportedly planning to introduce a new type of visa to attract fresh graduates from top universities around the world. Foreign university graduates who are granted the High Potential Individual (HPI) visa will be allowed to work and stay in the UK for two to three years, depending on the applicant’s degree level.
  Recently, the UK government released HPI’s latest list of accredited universities and said the new visa scheme will officially accept applications from May 30, 2022.
  On this latest list of the world’s top universities recognised by the UK government, there are four Chinese universities: Peking University, Tsinghua University, The University of Hong Kong and the Chinese University of Hong Kong.

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