UK unemployment hits four-year high as job vacancies sharply fall

Unemployment has risen to 4.7% in the three months to June—its highest level in four years—while job vacancies dropped by 44,000, signalling a cooling UK labour market. It remained at 4.7% in three months to July too. Employment, especially in hospitality, retail, arts and leisure, is shrinking with over 66,000 fewer people on payrolls. Although wage growth is at about 5%, once inflation is taken into account real wages are only up roughly 1.5%, meaning many workers face tighter finances. The drop in vacancies and payrolls suggests slackening demand for labour, putting downward pressure on inflation but increasing risks to households and economic growth.

Unemployment at four year high as job vacancies fall | ITV News

1. What is unemployment? Explain how the UK unemployment rate is calculated.

2. What evidence is there in the article that the ‘labour market is cooling?’

3. Discuss the potential economic costs of the UK’s unemployment remaining at a four-year high. Address how households, firms, government and the wider economy are affected, and reflect on possible policy trade-offs.