Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Mismatches in jobs market ‘put pressure on inflation’

by February 6, 2023
February 6, 2023
Mismatches in jobs market ‘put pressure on inflation’

A mismatch in the number of workers available to take up jobs and vacancies that need filling may keep inflation higher for longer, economists have warned.

Businesses are struggling to fill job openings because there are not enough workers in the right industries or locations or with the right skills, according to Sanjay Raja, chief UK economist at Deutsche Bank. The issue is said to a particular problem in the hospitality, health and social care, manufacturing and finance sectors.

Vacancies have fallen back from a record of 1.3 million last spring but remain at historically high levels. The unemployment rate is near a record low, but not because more people are in work. Employment remains below pre-pandemic levels, while an extra half a million workers have left the jobs market and are classed as “inactive”, meaning that they are neither in work nor available to take up jobs.

The main reason for the rise in inactivity over the past three years is older workers retiring early or stopping working because of long-term illness. There also has been a rise in young people entering study rather than work in response to the economic uncertainty caused by the pandemic.

Raja said that the high level of mismatches in the jobs market puts upward pressure on wages, which in the private sector are rising at near-record rates but are still falling short of inflation. Public sector pay is lagging behind, Office for National Statistics figures show.

Raja said: “Whether it is due to sorting inefficiencies or worker shortages due to a smaller post-pandemic labour force, the relatively higher level of labour market mismatches will — all else being equal — put continued upward pressure on wage growth as employers struggle to fill vacancies.” He said the Bank of England would need to do “more than it would have otherwise” to get inflation back to its target.

The labour market has been a key determinant of interest rate changes, having remained unexpectedly strong throughout the pandemic. Ratesetters at the Bank are watching jobs figures to understand if wages will rise and whether that could fuel inflation.

Paul Dales, at Capital Economics, the consultancy, said: “Due to the decline in the number of people making themselves available to work and also these mismatches — where vacant jobs are in the wrong sectors or places for the people looking for a job — the job vacancy rate is unusually high. Put simply, businesses can’t find suitable workers. When businesses are finding it hard to secure suitable workers, they have to raise their salaries.”

Dale said the fall in vacancies, to 1.1 million in the final quarter of last year, suggested Britain “might not be too far away” from a peak in wage growth. “That said, the job vacancy rate isn’t currently consistent with much slower wage growth. It may not need to fall further to prompt the Bank to stop raising rates. But it would need to fall further for them to be able to cut rates.”

Read more:
Mismatches in jobs market ‘put pressure on inflation’

0
FacebookTwitterGoogle +Pinterest
previous post
UK economy risks collapse without urgent investment in nature
next post
Business lending to drop at fastest rate in decades as recession fears intensify

You may also like

The Fastest Managed WordPress Hosting in New Zealand

February 8, 2023

UK government must tackle digital poverty to close...

August 11, 2022

HSBC Joins UK Banks in Cutting Mortgage Rates

June 25, 2024

Getting to Know You: Brad Walker, founder of...

August 13, 2024

Top Tips for Sending Money Overseas

August 31, 2022

iPhone prices could triple under Trump’s tariffs as...

April 6, 2025

Navigating the Wrangell Narrows with a Water Taxi...

May 2, 2025

UK energy secretary could get power to fast-track...

November 16, 2023

How to Get More Followers and Blast Your...

December 13, 2024

Jim Ratcliffe’s Ineos forced to recall 7,000 cars...

March 13, 2025

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Don’t Give Big Businesses Immunity from Litigation

      June 27, 2025
    • Unmasking Medicaid Money-Laundering Schemes: Medicaid Financing Gimmicks 101

      June 27, 2025
    • Top moments from the Trump-Biden debate that changed the course of the 2024 election

      June 27, 2025
    • Trump exerted ‘maximum pressure’ on Iran and Israel to ‘deliver peace’: Leavitt

      June 27, 2025
    • Iranian foreign minister reiterates ‘serious damage’ to nuclear facilities, despite ayatollah’s comments

      June 27, 2025
    • Maybe Most People Do Not Want Teacher-Led Public School Prayer—But They Do Want Chaplains

      June 27, 2025

    Categories

    • Business (8,329)
    • Investing (2,077)
    • Politics (15,829)
    • Stocks (3,173)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved