Britain’s labour shortage worsened in late 2021, with job vacancies climbing to record levels, but average earnings began to fall as inflation outpaced wage growth.

Official data on Tuesday showed the unemployment rate fell to 4.1 percent in the three months to November, 0.1 percentage point higher than the pre-pandemic unemployment rate. The employment rate rose to 75.5%, but was still 1.1 percentage points below its pre-crisis level – as the ONS said increased inactivity as older workers dropped out of the labor force.

with employer Recruit hard, the number of job vacancies rose to a record 1,247,000 in the three months to December, equivalent to 4 vacancies for every 100 employee jobs in the economy, with 1 million vacancies in the health and social care sector alone .

In the early stages of Omicron’s outbreak, there were few signs of any hit to employment, with real-time data for December showing the number of wage employees rose by 184,000.

Chancellor Rishi Sunak said the figures showed a “booming” job market and economists said they strengthened the case for higher interest rates to stop the economy from overheating.If coronavirus restrictions remain, says KPMG’s Yael Selfin Cancelled next week, “The labor market could get hotter, justifying the Bank of England’s hawkish stance ahead of Christmas”.

But the director of the Employment Institute, Tony Wilson, said the figures were “disappointing”, with inactive numbers rising despite unprecedented demand for staff. “With nearly as many job openings as unemployed people, employers are facing the tightest labor market in at least 50 years, and labor shortages are now holding back our recovery,” he said.

“The good news is that the unemployment rate has returned to pre-pandemic levels, but the same cannot be said for real employment,” said Kitty Usher, chief economist at the Institute of Directors, adding: “The legacy of the pandemic appears to be increase in economic inactivity”.

Helen Barnard, policy director at charity Pro Bono Economics, said there was “no quick fix” to the increase in economic inactivity as it was driven by a growing number of people leaving the workforce due to long-term illnesses Received “continuous and tailored support”. “The trend needs to be reversed.

While the scarcity of workers has driven faster wage growth in some industries, the ONS says average earnings are now actually falling, with Inflation outpaces wage growth. The main measure of average weekly earnings (excluding bonuses) growth in the three months to November was 3.8%, while real earnings were flat over the same period, down 1% in November alone.

ING economist James Smith believes employment and wage growth will slow in the coming months after a period in which both employers and employees are “catching up” and the Bank of England will not raise interest rates to match the market. As much as currently expected.

Hannah Slaughter, senior economist at the Resolution Foundation, said that while the job market was healthy, falling wages would exacerbate the cost of living crunch, adding: “The big picture is that the UK will emerge from the pandemic and wages will be reduced. , the number of people in the labor market fell by more than 500,000.”