The recent increase in the minimum wage has had significant implications on summer job hiring, affecting several key sectors. New data illustrates a marked decline in seasonal job postings.
- Employers are cutting back on seasonal hires due to concerns about labour shortages and increased wage costs.
- Data from the REC shows a significant drop in temporary summer job postings in April and May compared to the same period last year.
- The hospitality, tourism, and construction sectors are the most affected, with substantial reductions in job listings.
- Labour shortages and increasing wage pressures are complicating efforts to manage inflation and economic growth.
New figures reveal that employers are significantly reducing seasonal hiring amid broader concerns about labour shortages in crucial sectors of the economy. Data from the Recruitment and Employment Confederation (REC) indicates a noticeable decline in job postings for temporary summer positions in the hotel, restaurant, tourism, and construction sectors during April and May compared to the same months last year. This trend follows the recent rise in the minimum wage.
Separate data from Make UK, a lobby group representing manufacturing companies, underscores ongoing skills shortages that hinder expansion potential. The latest quarterly index from Make UK shows that recruitment intentions in the manufacturing sector have grown from 8% to 26%, reflecting a recovery in the industry. However, the struggle to hire skilled workers remains a significant challenge.
Labour shortages in specific parts of the economy are contributing to sustained wage growth, complicating the Bank of England’s efforts to reduce interest rates. The Bank’s monetary policy committee is expected to maintain the base rate at 5.25% this week, citing concerns that rising earnings are hindering efforts to bring inflation down to the 2% target.
Overall job listings across the economy fell by 0.7% last month, totalling 1.7 million, while new job listings decreased by 1.1% between April and May, according to the REC. This indicates a cooling labour market. Neil Carberry, CEO of the REC, noted, “A second big increase in the national minimum wage has affected hiring levels in key sectors. We can see some evidence of that drag in the lower summer seasonal hiring demand. Reducing hours or roles while opening for shorter periods are all decisions that firms may feel forced to make in tough times.”
Data shows that job postings in the hotel and accommodation sector dropped by 45% in April and May compared to the same period in 2023. Similarly, restaurant and catering roles fell by 38%, and positions for chefs and cooks declined by 33%. Tourism and event roles also saw reductions across most regions.
The increase in the minimum wage has contributed to overall wage growth in the economy, reaching 6% in the three months to April, according to official figures released last week. The pace of earnings growth is a critical factor influencing monetary policy, with the Bank of England indicating that signs of an earnings slowdown are necessary to justify significant rate cuts this year.
Despite the challenges, there are signs of recovery in some sectors, such as manufacturing, which experienced a near-two-year recession. Output in the manufacturing sector increased from a balance of 5% to 9% in the second quarter, with projections for a 30% rise in the three months to September, driven by falling inflation, energy prices, and interest rates, according to Make UK.
The rising minimum wage has led to a significant reduction in summer job hiring, particularly in the hospitality, tourism, and construction sectors, amidst ongoing labour shortages and wage growth pressures.
