A look back at the world of work and the labour market in 2023

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Male staff worker in warehouse uses hand pallet stacker to transport goods.

As 2023 draws to a close, we asked our team to review their key moment from the world of work and the labour market.

Celebrating Childcare

Emelia Williams, Research and Policy Analyst

Whilst the announcements were just the tip of the iceberg in terms of the reforms that are needed, it was great to see that childcare was front and centre of the Spring Budget 2023. The announcement demonstrated a dramatic change in the way that the sector is at last being recognised by those in power and highlights that collective calls for change are gaining traction. Both supporting mothers back into the workforce and improving the quality of childcare are crucial to tackling the Gender Pay Gap.

Living standards squeeze

Aman Navani, Research and Policy Analyst

Real wages fell for most of the year due to stubbornly high inflation. While wage growth outstripped inflation towards the end of year, slow growth and falling vacancies means that this recovery in real wages is unlikely to continue for much longer and will not make up for years of sluggish productivity and wage growth. The OBR forecasts that living standards will be 3.5% lower in 2024-2025 than their pre-pandemic level. Reversing this living standards squeeze will be the central policy challenge in the years ahead and is likely to dominate the political debate in the build-up to the next election.

Greater access to flexible jobs

Asli Atay, Policy Advisor

One of the landmark developments in 2023 was the passing of the Employment Relations (Flexible Working) bill, which received Royal Assent. This move signifies a major shift towards the right direction, granting millions of UK workers more control over where and when they work from 2024. The act notable enhances access to job flexibility, a demand has grown significantly since the pandemic. While the bill does not grant a day-one right to request flexible working arrangements, the government has been clear about its intention to implement this provision.

The government anticipates early 2024 for both the regulations to take effect and for the full provisions of the Act to commence. This development is a response to the evolving needs of the workforce and represents a significant step towards adjusting to the new work practices. As we await the implementation, there is growing desire to see its benefits to employees’ wellbeing and productivity.

Supreme court ruling on gig economy

George Williams, Research and Policy Analyst

In December the Supreme Court ruled that those working for Deliveroo can’t be considered as employees. This was a major blow to employment rights in the UK and the ongoing campaign to secure better protections for gig economy workers. The ruling leaves Deliveroo workers without access to vital employment rights and protections, including Statutory Sick Pay, minimum wage and the right to collective negotiations on both pay and conditions.

The Supreme Court’s decision not only went against the grain of EU proposals, but it could also encourage other gig companies to adopt the insecure employment practices used by Deliveroo, resulting in more people trapped in insecure work.

The back to work agenda

Alice Martin, Head of Research

The Government's Autumn Statement introduced the Back to Work Plan targeting 2.6 million workers unable to work due to health issues with a suite of welfare reforms. A welcome emphasis on employment support was overshadowed by proposals to introduce more punitive measures, including the possible withdrawal of resources like legal aid and free NHS prescriptions as part of an expanded sanctions regime.

Proposals to remove benefits after 12 months of unemployment and enforce mandatory work or job search requirements, a return of ‘workfare’, raised particular concerns given the current state of play in the labour market which is characterised by declining job vacancies. Where labour shortages remain, they tend to be in sectors with entrenched insecure work such as hospitality and social care.

National Living Wage rises by 9.8% to over £11, but not everyone will get it

Jon Fitzmaurice, Head of Engagement

In November, the UK Government announced it accepted the Low Pay Commission's recommendation to raise the National Living Wage (NLW) for workers aged 21 and over to £11.44 from April 2024.

This would normally be a huge moment for low-paid workers but after 16 consecutive months of inflation above 7%, living standards are still lower than a few years ago. The good news is that for the first-time workers aged 21 and 22 will get the same level as older workers.

However, the Low Pay Commission estimates that 334,000 workers were underpaid the minimum wage by their employers in April 2022. While this has fallen in recent years, with no further investment in enforcement or the creation of a Single Enforcement Body – as promised in the Conservative 2019 Manifesto – it is likely hundreds of thousands of low-paid workers will not see the true benefits of the National Living Wage rise in 2024.

Job opportunities

Rebecca Florisson, Principal Analyst

Although labour shortages persisted into 2023, these were concentrated in specific sectors of the economy, while in others, vacancies fell. A falling number of job opportunities reflects increasing hiring hesitancy among businesses. This signals that it has become increasingly difficult for jobseekers to obtain work. Unfortunately, due to issues with national data sources, policymakers and the public are in the dark about some of the key questions of the day, e.g. what is happening to people who are out of work and not looking for work due to long-term sickness.

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