Employers struggle to find workers

Labour is so scarce that employers are struggling to fill jobs, according to analysis by the Office for National Statistics.

Official figures put the number of unemployed people per vacancy near historic lows, the proportion of people “inactive” has dropped to record levels and the number of those in work is at an all-time high.

“This points to a reduction in spare capacity in the labour market, raising the risk of skills shortages,” the ONS said.

All this normally would be expected to drive up wages, but official data suggests that pay growth is slowing, “confounding expectations that the tightening labour market would lead to stronger earnings growth”, the ONS said.

The analysis will be of interest to the Bank of England, which is watching the jobs market closely for signs of inflationary pressures to gauge when to increase interest rates. Unemployment has fallen to 5.1 per cent, its lowest level in a decade and in line with the Bank’s 5 per cent estimate of the neutral rate below which wages should start escalating. The Bank’s surveys have found evidence of recruitment bottlenecks.