Britain's labour market is cooling mainly through weaker hiring rather than increased firing, making it harder to enter work or change jobs, a Bank for International Settlements publication said.
The speech, “The low-gear labour market”, was published on Nov. 12. The hiring slowdown adds to a longer decline in workers changing jobs. That combination protects people already employed while limiting opportunities for those seeking work or a different role.
The speech examined the current UK hiring slowdown alongside longer-term changes in how workers move between jobs, industries and roles requiring different skills. It supplied no numerical estimates, defined study period or underlying dataset.
The UK economy had weathered the recent energy cost shock better than expected. Economic activity had held up better than anticipated, unemployment had increased gradually and redundancies had remained relatively low.
Those developments had benefits, but the limited hiring that accompanied them created difficulties for people outside employment. Workers seeking to move on also faced fewer opportunities in a market where employers were hiring and firing less.
The longer-term change extends beyond how often people switch employers. Workers who move are also less likely to change industry or take work that requires different skills, reducing the market's ability to connect people with new opportunities.
That has implications for interpreting rising unemployment. If jobseekers' skills do not fit the available jobs, a higher unemployment rate may do less to slow wage increases than it did in the past.
The speech made that conclusion conditional on a poor fit between people seeking work and employers' requirements. Its argument was that rising unemployment may have a different effect on wages when workers cannot readily fill the jobs on offer.
Less movement between jobs can also weaken productivity and economic growth. Changing roles helps people find work that makes better use of their skills, while slower movement leaves fewer opportunities for advancement.
Employers, in turn, find it harder to recruit the staff they need. Young people bear a particularly heavy share of the costs because taking the first step into employment has become more difficult.
The speech also linked worker mobility to the economy's ability to adjust as artificial intelligence changes job tasks and employers' skill requirements. A labour market with less movement can make that adjustment harder.
The benefits from artificial intelligence will depend partly on how easily workers can reach the opportunities it creates. Its concern therefore extends beyond today's hiring slowdown to workers' ability to move into different kinds of employment.
