IoD press release Labour market cooling, but there is still work to be done to plug skills gaps

Commenting on this morning’s release of labour market statistics that showed signs of continued cooling, Alexandra Hall-Chen, Principal Policy Advisor for Employment at the Institute of Directors, said:

“Employers will welcome signs that the labour market continues to cool, with vacancies decreasing on the quarter for the 23rd consecutive period and a slight drop in economic inactivity.

“However, availability of skills remains a top issue for businesses. In IoD research in May 2024, almost half (45%) of business leaders cited skills and labour shortages as having a negative impact on their organisation.

“Bringing people back into the workplace and tackling skills gaps in the UK economy therefore needs to front and centre in the new government’s industrial strategy; action to tackle these challenges will be key to achieving strong economic growth.

“We welcome the government’s commitment, outlined in the King’s Speech yesterday, to putting employer engagement at the heart of Skills England. It is crucial that analysis from Skills England is used to target government skills interventions in areas of current and future skills shortages so that businesses can recruit the staff they need.

“Today’s data also shows pay growth easing to 5.7%. But despite other signs that the labour market continues to soften, this may not be sufficient to sway a majority on the MPC toward cutting rates in August.”

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