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The data from the Office for National Statistics (ONS), which covered the three months to the end of April, prompted a fresh call from one of Britain's largest business organisations for a relaxation of the nation's immigration rules.

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Employment rates at record highs

According to the ONS, the unemployment rate also fell unexpectedly in the quarter to 3.8 per cent, down from 3.9 per cent over the previous three months, while the employment rate rose to a record 76 per cent, representing a total of 33.1 million Britons in work.Meanwhile, although the number of job vacancies declined from the previous quarter – the result, the ONS said, of “uncertainty across industries, as survey respondents continue to cite economic pressures as a factor in holding back on recruitment” – the total still stood at 1.05 million last month.Jane Gratton, head of people policy at the British Chambers of Commerce, said that while it was positive to see unemployment remaining low, the "incredibly tight" labour market continued to bring with it additional problems and costs for employers.“Staff shortages continue to damage productivity, with many firms struggling to fulfil their order books and turning away new business," she said."Fierce competition for skills, wage demands and candidates’ expectations leave many businesses with job vacancies they can’t fill. Together with broader inflationary pressures, it’s a perilous environment for business.“The government must support more people back into work and create the right conditions for employers to invest in staff training and development. Where firms cannot recruit and train from their local or national labour market, a flexible, efficient and affordable immigration system is crucial.”

Employment rate returns to pre-pandemic levels

Darren Morgan, director of economic statistics at the ONS, said that the latest rise in employment meant that the number of people in work overall had gone past its pre-pandemic level for the first time. Not only had the number in work hit a record, but so had the total hours worked, he said.“The biggest driver in recent jobs growth, meanwhile, is health and social care, followed by hospitality," Mr Morgan added. “While there has been another drop in the number of people neither working nor looking for work, which is now falling right across the age range, those outside the jobs market due to long-term sickness continues to rise, to a new record.”The ONS also reported that regular wages, not including bonuses, rose by 7.2 per cent in the quarter to April, up from 6.8 per cent in the three months to March.Kitty Ussher, chief economist at the Institute of Directors (IoD), said that while the figures showed the labour market had stabilised a little since the acute shortages of late 2021, "it remains very tight by historical standards".She added: “It also confirms a structural shift: more people with home and caring responsibilities are working than before the pandemic, presumably because they can do so remotely, but those excluded from the labour market due to sickness is depressingly far higher.“The latest IoD survey data – from May 2023 – supports the same conclusion of a tight labour market: it shows skills and labour shortages are cited by around half of business leaders (46 per cent) as having a negative impact on their organisation, second only to more general concerns about the UK economy.”

Inactivity falling but renewed action on flexibility and wellbeing needed

Matthew Percival, director for people and skills policy at the Confederation of British Industry, warned that the increase in long-term sickness remained a concern.“While the number of people in work is rising and unfilled vacancies are slowly falling, the difficulties companies face when hiring is still a hard brake on growth," he said."Signs that stubbornly high inactivity is starting to fall are encouraging, but a new record high number of people unable to work because of long-term sickness is a real cause for concern.“Business and government have identified getting people back into work as a top priority. A laser-like focus on delivering the promised expansions to childcare and occupational health services, and businesses increasing flexible working, can quicken the pace of easing shortages.”

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