Key Points:
- Foreign interest in UK jobs remains high as immigration continues to be a leading topic in advance of the upcoming UK election.
- Job postings are broadly in line with pre-pandemic levels.
- Posted wage growth rose to a four-month high in May.
The UK labour market has continued its adjustment in recent months, but remains somewhat tight and competitive for employers in many sectors — particularly for lower-paid workers, where wage pressures remain strongest. The ability to offer flexibility also remains a key tool used by employers in their battles for talent.
Spotlight: Foreign interest in UK jobs remains high
Foreign interest in UK jobs has rebounded from pandemic lows. More than 1-in-20 (5.2%) searches for UK jobs in May came from jobseekers based abroad. While lower than the recent December 2023 peak of 6.3%, that’s still roughly double the sub-3% levels common during the depths of the pandemic. Meanwhile, the share of job searches originated in the UK for opportunities abroad stood at 2.2% in May, only slightly above pandemic-era lows and somewhat below pre-pandemic norms.
Unsurprisingly, the list of countries with the highest shares of job seekers interested in UK jobs differs widely today from the pre-Brexit situation. Whereas EU countries and the US used to dominate the top 10 prior to the 2016 referendum, Anglosphere and former Commonwealth countries now feature prominently.
The categories attracting the highest share of foreign clicks in 2024 are predominantly higher-paying — including tech, engineering, healthcare and finance. With post-Brexit immigration policy favouring the high-skilled end of the labour market, many of these categories have seen rising foreign interest.
More specialised jobs are harder to fill
Despite this, many of the jobs in these categories remain hard-to-fill. The share of job postings open for an average of 60 days or more is generally highest for roles requiring higher levels of skills and experience, including veterinary and many engineering roles. The difficulty in quickly filling these roles is likely a reflection of the shallower pools of candidates with these qualifications.
Labour Market Overview
The latest figures from the Office for National Statistics (ONS) show a now-familiar combination of further softening in the labour market but stubbornly strong wage growth. The unemployment rate ticked up to 4.4% in June, its highest in over two-and-a-half years, while vacancies dipped again to 904,000. Alternative measures of employment showed contradictory trends, with the labour force survey measure of employment falling but workforce jobs showing growth, underlining the current difficulty in interpreting the official labour market statistics.
The ratio of unemployed people to vacancies now stands at 1.7, up from a low of 1.0 in mid-2022, but remaining below its average of 2.9 since 2001. That points to a labour market that is gradually softening but remains somewhat tight.
Additionally, a further increase in inactivity underlines the challenge facing the next government in bringing more workers into the labour force. Some 9.3 million workers are currently inactive, up by 883,000 people since the eve of the pandemic. Long-term sickness remains a key concern amid near-record NHS waiting lists.
Limited job losses are another sign of the labour market’s resilience. The number of potential redundancies notified to the government has remained within a stable range in recent months.
Job postings have continued to decline
After peaking in late 2022, job postings on Indeed have continued to gradually decline ever since and are now slightly below their pre-pandemic level, indicating a normalisation of hiring demand. In the absence of large-scale job losses, weaker hiring continues to do the heavy lifting in helping the labour market adjust to a more-sustainable balance between labour supply and demand.
Job postings have slowed in the majority of occupational categories throughout 2024. But the level of postings remains high in some categories, led by education & instruction, where they are more than double their pre-pandemic level. Conversely, job postings for beauty & wellness and tech-related categories are furthest below their pre-pandemic baseline levels.
Pay pressures persist
The latest ONS figures show that pay growth remained strong at 5.9% (total pay) and 6.0% (regular pay) year-on-year in the three months to April. Annual pay growth is comfortably exceeding the annual rate of inflation (2%), good news for workers who are seeing real wages rising.
But for the Bank of England — wrestling with key decisions on if, when, and by how much to cut benchmark interest rates that it raised over the past few years to fight stubborn inflation — wage growth is running uncomfortably high. The headline inflation rate is in line with the Bank of England’s target for the first time in three years, but some rate-setters remain wary that keeping inflation at target could prove difficult if wage growth persists at current levels. Rapid pay growth could make it harder to keep inflation low if firms pass on higher staff costs by raising prices. Policymakers will need to judge the extent to which the softer labour market and declining headline inflation are likely to bring down wage growth over the coming months.
Evidence from posted wages for new hires suggests that strong pay growth may be likely to persist in the near-term. Annual growth in the Indeed Wage Tracker (IWT), which measures advertised pay in Indeed job postings, ticked up to a four-month high of 6.5% in May.
Typically lower-paying categories including childcare (wages up 8.6% year-on-year), cleaning & sanitation (8.5%), security & public safety (8.5%), loading & stocking (8.2%), retail (8.1%) and hospitality & tourism (8.0%) exhibited the strongest annual growth in wages, according to IWT. The large minimum wage uplift that went into effect on 1 April continues to be a factor supporting high wage growth in these categories, alongside tight occupation-specific hiring conditions.
Among the lowest-paid third of occupations, annual posted wage growth ticked up to 7.3% in May, while mid-tier growth came in at 6.2%, and high-tier growth was 5.6%. The persistent wage growth gap between low, middle, and high pay tiers in the UK contrasts with the situation in the US. The substantial edge in annual pay growth for low-paying occupations that opened in the US at the height of post-pandemic labour shortages in 2021/22 has been substantively closed since early 2023.
Pay transparency is high and rising
The share of UK job postings that include some form of wage or salary information has risen steadily over the past five years and currently sits at 76%, just shy of recent highs. That compares favourably with European countries and the US. Including pay information in the job posting can help align salary expectations from the outset and help ensure a relevant candidate pipeline.
Flexibility remains in focus
In a labour market that remains somewhat tight, flexibility remains in focus for employers looking to gain an edge in candidate attraction. The share of job postings mentioning remote or hybrid work has remained steady at around 15% of job postings for some time now, despite some employers pushing return-to-office policies.
Many of the categories with the highest remote/hybrid job posting shares, led by tech and professional services occupations, have seen increases over the past year.
Jobseeker interest in remote and hybrid work shows no sign of fading. Around 2.4% of searches contained remote/hybrid terminology as of end-May, with the share having remained fairly stable over the past couple of years.
Of course, many jobs can’t be done remotely. Here, we have seen a focus on other forms of flexibility — for example, around hours and shift patterns. Four-day work weeks remain a niche part of the labour market, with just 0.8% of job postings mentioning these arrangements, though the share has been rising. The prevalence of four-day work weeks is highest among categories where remote and hybrid work is lowest (1.1%) versus medium-remote (0.5%) and high-remote (0.8%). Veterinary (18.5%), childcare (3.1%) and dental (2.9%) are the categories with the highest shares of four-day work week postings.
Conclusion
The UK labour market has cooled, but it remains competitive for employers in many sectors, and persistently high inactivity continues to limit the supply of potential workers. While foreign jobseeker interest remains healthy, that’s mainly benefiting the high-skilled end of the market. Lower-paid categories continue to find hiring conditions more challenging, and pay pressures there are correspondingly persisting to a greater extent. Flexibility also remains a focus for employers looking to stay competitive in candidate attraction.
Hiring Lab Data
Job postings data is available on our Data Portal. We also host the underlying job-postings chart data on Github as downloadable CSV files. Typically, it will be updated with the latest data one day after this blog post is published.
Methodology
Data on seasonally adjusted Indeed job postings are an index of the number of seasonally adjusted job postings on a given day, using a seven-day trailing average. Feb. 1, 2020, is our pre-pandemic baseline, so the index is set to 100 on that day. We seasonally adjust each series based on historical patterns in 2017, 2018, and 2019. We adopted this methodology in January 2021. Data for several dates in 2021 and 2022 are missing and were interpolated. Non-seasonally adjusted data are calculated in a similar manner, except that the data are not adjusted to historical patterns. Note that we have recently restated the historical JPI data for several countries, including the UK, due to a methodology change.
To calculate the average rate of wage growth, we follow an approach similar to the Atlanta Fed US Wage Growth Tracker, but we track jobs, not individuals. We begin by calculating the median posted wage for each country, month, job title, region and salary type (hourly, monthly or annual). Within each country, we then calculate year-on-year wage growth for each job title-region-salary type combination, generating a monthly distribution. Our monthly measure of wage growth for the country is the median of that distribution.
The number of job postings on Indeed.com, whether related to paid or unpaid job solicitations, is not indicative of potential revenue or earnings of Indeed, which comprises a significant percentage of the HR Technology segment of its parent company, Recruit Holdings Co., Ltd. Job posting numbers are provided for information purposes only and should not be viewed as an indicator of performance of Indeed or Recruit. Please refer to the Recruit Holdings investor relations website and regulatory filings in Japan for more detailed information on revenue generation by Recruit’s HR Technology segment.
