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Warning that post-lockdown jobs boom is ending

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The UK’s jobs market, which has been buoyant since the economy began to recover from the pandemic, might be starting to turn, experts have warned.

Although the unemployment rate fell to 3.6% in the three months to July – the lowest since 1974 – the employment rate and number of vacancies also fell.

Rises in regular pay are also failing to keep up with rising living costs.

“The jobs boom that began six months after the pandemic is probably coming to an end now,” said the boss of Reed.

Speaking to the BBC’s Today programme, James Reed, who chairs the recruitment business, said: “There are still very large numbers of vacancies and people are still advertising a lot of jobs, and that’s why we’ve seen unemployment continue to go down.

“The question is, what happens next? Will there be a jobs slump? That’s a concern clearly but our data at the moment doesn’t suggest that, because we’ve still got a large number of vacancies and a lot of employers are still struggling to recruit.”

One reason for the fall in the unemployment rate is a rise in the number of people who are no longer looking for work, and so not counted in the figure. The inactivity rate rose to 21.7%, the Office for National Statistics (ONS) said, the highest since 2017.

The squeeze on pay also remains, with rises in regular pay lagging behind inflation. When taking the rise in prices into account, the value of regular pay fell by 2.8%, the ONS said.

Inflation – a measure of price rises – remains at a 40-year high of 10.1% and the latest figure, due out on Wednesday, is forecast to be higher.

The continued gap between private and public sector pay growth was also visible from the ONS’s figures.

Average regular pay growth for the private sector was 6% in May to July, compared with 2% for the public sector. According to the ONS, that is the largest ever difference between private and public sector, outside of the height of the pandemic period.

Despite the jobless rate falling to its lowest rate for 48 years, other measures suggested that the jobs market might be beginning to turn.

The number of job vacancies fell by the most in two years, down 34,000 between June and August, although the overall number of vacancies still remains historically high.

Vacancies graphic

The employment rate also slipped to 75.4%, a small drop from the previous three-month period.

The EY Item Club said the fall in the unemployment rate masked some job market weakness.

“The decline in joblessness disguised what was only a modest 40,000 rise in employment, the smallest since January to March, with a rise in inactivity playing a bigger role in pushing unemployment down,” said Martin Beck, chief economic adviser to the EY Item Club.

“Moreover, the single-month data showed the number in work in July falling on three months earlier to the greatest extent since January 2021. This suggests that the weak economy is starting to have an adverse effect on the jobs market.”

While the headline jobs numbers remain strong, with the unemployment rate at its lowest in nearly half a century and long-term joblessness down, there are some signs of a turn here.

Firstly the lower unemployment rate is not really about a jobs boom, it is more reflective of fewer people actively looking for work. That in turn, in the very latest figures, arises out of record numbers of long-term sick. There could be an economic impact here from record NHS waiting lists.

So the latest jobs numbers remain the silver lining on some dark economic clouds. Other elements here reflect the wider cost of living pressures.

Real pay continues to fall sharply, especially for public sector workers. This is despite some high cash-terms pay growth. And despite a slowing economy, vacancies remain high. Labour shortages are in turn restraining businesses, and in particular could mean inflation remains higher for longer.

There is one unemployed person per vacancy, a record low, and the jobs are not being filled. But if the government wants to “go for growth” that will have to change.

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Rob Sutton
Image caption,

Rob Sutton is facing challenges trying to recruit staff for his business.

Rob Sutton is founder of RKW, the UK’s largest manufacturer, distributor and designer of small domestic appliances.

He employs 500 people in Stoke-on-Trent in the West Midlands and said his wage bill has gone up by more than £2.5m in the past two years.

“We are having to review our wage costs on a monthly basis because it is moving at that fast a speed,” he said.

“It has been an absolute nightmare, where we are having to increase [wages] all the time so all our costs are going up and nothing is coming down at the moment.

His business is expanding and trying to recruit more staff, but it has been a challenge.

“We’ve probably got around 20 vacancies that we cannot fill,” he says.

“We’ve had examples where recruitment agencies have come onto our car park where our employees are parked and they put letters on the windscreens saying ‘we will give you £1,000 to come and join the company’ to entice them away because there has been a massive shortage of order picking and warehouse operators.

“That’s mainly because a lot of the European workers have gone home pre-Covid.”

Labour shortages

Businesses have warned that the squeezed labour market is having a detrimental effect.

“With firms doing their best to keep afloat during a period of spiralling costs, they are also facing an extremely tight labour market which is further impacting their ability to invest and grow,” said Jane Gratton from the British Chambers of Commerce.

“During a period of increasing inflation, and a stagnant economy, we cannot afford to let recruitment problems further dampen growth.”

Tony Wilson, director at the Institute for Employment Studies, also warned that “firms simply can’t find the workers to fill their jobs”.

“This is holding back growth but also pushing up inflation, with pay growth in the private sector now running above 6% and contributing to even higher prices.”

Writes /BBC/

Reports /TrainViral/

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Six tonnes of cocaine found in banana shipment

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Sniffer dogs in Ecuador have found 6.23 tonnes of cocaine hidden in a banana shipment, police say.

The dogs alerted their handlers, who seized 5,630 parcels filled with a white substance that later tested positive for cocaine.

The shipment was destined for Germany, officials said, and would have been worth $224m (£173m) had it reached its destination.

Five people had been arrested following the discovery, according to the prosecutor-general’s office.

Police said they had found the massive cocaine haul during a routine inspection of container stored at Posorja deepwater port south-west of Ecuador’s largest city, Guayaquil.

The cocaine parcels had been hidden beneath crates of bananas destined for export.

One of those arrested in connection to the drug discovery was a representative of the export company responsible for the shipment, whom prosecutors said had been present at the inspection and gave officials the names of the four other suspects.

They include the managers of the banana plantation where the cocaine is suspected to have been added to the fruit shipment, as well as the driver who took the container to the port.

Ecuador has become a major transit country for cocaine produced in neighbouring Peru and Colombia, with transnational criminal gangs using Ecuador’s ports to ship the drug to Europe and the US.

Last year, Ecuadorean security forces seized more than 200 tonnes of drugs, most of it cocaine. Only the US and Colombia seized more drugs in 2023.

Gangs have caused a wave of violent crime in Ecuador, leading President Daniel Noboa to declare a state of emergency and deploy tens of thousands of police officers and soldiers in an effort to combat them.

These security forces have stopped large amounts of cocaine from being shipped to Europe.

In January, officers found the largest stash ever to be seized in Ecuador – 22 tonnes of cocaine – buried in a pig farm.

However, extortion, kidnappings and murders remain high in the Andean country.

Reports /Trainviral/

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Thailand expands v-free entry to 93 countries

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Thailand has expanded its visa-free entry scheme to 93 countries and territories as it seeks to revitalize its tourism industry.

Visitors can stay in the South-East Asian nation for up to 60 days under the new scheme that took effect on Monday,

Previously, passport holders from 57 countries were allowed to enter without a visa.

Tourism is a key pillar of the Thai economy, but it has not fully recovered from the pandemic.

Thailand recorded 17.5 million foreign tourists arrivals in the first six months of 2024, up 35% from the same period last year, according to official data. However, the numbers pale in comparison to pre-pandemic levels.

Most of the visitors were from China, Malaysia and India.

Tourism revenue during the same period came in at 858 billion baht ($23.6bn; £18.3bn), less than a quarter of the government’s target.

Millions of tourists flock to Thailand every year for its golden temples, white sand beaches, picturesque mountains and vibrant night life.

The revised visa-free rules are part of a broader plan to boost tourism.

Also on Monday, Thailand introduced a new five-year visa for remote workers, that allows holders to stay for up to 180 days each year.

The country will also allow visiting students, who earn a bachelor’s degree or higher in Thailand, to stay for one year after graduation to find a job or travel.

In June, authorities announced an extension of a waiver on hoteliers’ operating fees for two more years. They also scrapped a proposed tourism fee for visitors flying into the country.

However some stakeholders are concerned that the country’s infrastructure may not be able to keep up with travellers’ demands.

“If more people are coming, it means the country as a whole… has to prepare our resources to welcome them,” said Kantapong Thananuangroj, president of the Thai Tourism Promotion Association.

“If not, [the tourists] may not be impressed with the experience they have in Thailand and we may not get a second chance,” he said.

Chamnan Srisawat, president of the Tourism Council of Thailand, said he foresees a “bottleneck in air traffic as the incoming flights may not increase in time to catch up with the demands of the travellers”.

Some people have also raised safety concerns after rumours that tourists have been kidnapped and sent across the border to work in scam centres in Myanmar or Cambodia.

fatal shooting in Bangkok’s most famous shopping mall last year has also caused concern among visitors.

Reports /Trainviral/

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Royal Mail will deliver letters forever

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The prospective new owner of Royal Mail has said he will not walk away from the requirement to deliver letters throughout the UK six days a week, as long as he is running the service.

“As long as I’m alive, I completely exclude this,” Czech billionaire Daniel Kretinsky told the BBC.

Mr Kretinsky has had a £3.6bn offer for Royal Mail accepted by its board.

Shareholders are expected to approve the deal in the coming months, but the government also has a say over whether it goes ahead.

Currently the Universal Service Obligation (USO) requires Royal Mail to deliver letters six days a week throughout the country for the same price. But questions have been raised over whether the service could be reduced in the future.

In an exclusive interview with the BBC, Mr Kretinsky also said he would be willing to share profits with employees, if given the go-ahead to buy the group.

However, he appeared to reject the idea of employees having a stake in Royal Mail, which unions have called for in exchange for their support.

The Royal Mail board agreed a £3.6bn takeover offer from Mr Kretinsky in May for the 500-year-old organisation, which employs more than 150,000 people. Including assumed debts, the offer is worth £5bn.

But because Royal Mail is a nationally important company, the government has the power to scrutinise and potentially block the deal.

As well as keeping the new government on side, Mr Kretinsky also faces the task of convincing postal unions that the proposed deal will benefit employees.

The USO is a potential sticking point for both the government and unions.

Royal Mail is required by law to deliver letters six days a week and parcels five days a week to every address in the UK for a fixed price.

How well this has actually been working in practice is a different matter. Ten years ago, 92% of first class post arrived on time. By the end of last year it was down to 74%, according to the regulator Ofcom.

Last year the regulator fined Royal Mail £5.6m for failing to meet its delivery targets.

Royal Mail has been pushing for this obligation to be watered down. It wants to cut second class letter deliveries to every other weekday, saying this will save £300m, and lead to “fewer than 1,000” voluntary redundancies.

‘Unconditional commitment’

Mr Kretinsky has committed in writing to honouring the USO, but only for five years.

And after that, in theory, the new owners could just walk away from it.

However, Mr Kretinsky told the BBC: “As long as I’m alive, I completely exclude this, and I’m sure that anybody that would be my successor would absolutely understand this.

“I say this as an absolutely clear, unconditional commitment: Royal Mail is going to be the provider of Universal Service Obligation in the UK, I would say forever, as long as the service is going to be needed, and as long as we are going to be around.”

Mr Kretinsky added that the written five-year commitment was “the longest commitment that has ever been offered in a situation like this”.

Woman's hand posting a letter into a red post box

Another potential stumbling block for the deal, however, is how the company will be structured.

Unions would like to see the company renationalised, but Dave Ward, general secretary of the Communication Workers Union (CWU), told the BBC that would be “difficult in the current political and economic environment”.

Instead, what the CWU is pushing for is “a different model of ownership” – that is, where the employees part-own the business.

To get its support for the takeover, the union wants employees to share ownership of the company, along with other concessions including board representation for workers.

It says profit sharing is “not going to be enough to deliver our support and the support of the workforce”.

If the union doesn’t get what it wants, it won’t rule out industrial action, Mr Ward said. Its members went on strike in 2022 and 2023.

Although Mr Kretinsky said he is “very open” to profit sharing, he is not in favour of shared ownership.

“I don’t think the ownership stake is the right model,” he said. “The logic is: share of profit, yes, [but an] ownership structure creates a lot of complexity.

“For instance, what happens if the employee leaves? He has shares, he is leaving, he is not working for the company, he [still] needs remunerating.”

Mr Kretinsky said he didn’t want to create “some anonymous structure” but instead “remunerate the people who are working for the company, and creating value for the company”.

The union is also concerned about job losses and changes to the terms and conditions of postal workers’ contracts.

Mr Kretinsky has guaranteed no compulsory redundancies or changes in terms and conditions but only until 2025.

“If we are more successful, and we have more parcels to be delivered, we need not less people, but we need more people,” he said. “So really, job cuts are not part of our plan at all.”

He said if the management, union and employees work together, “we will be successful”.

Another concern is the potential break-up of the business.

The profit for Royal Mail’s parent company last year was entirely generated by its German and Canadian logistics and parcels business, GLS. Royal Mail itself made a loss.

Mr Kretinsky has promised not to split off GLS or load the parent company with excessive debt, although borrowings will rise if the deal goes through.

But he has a way to go to convince the CWU.

“I can’t think of any other country in the world that would just just hand over its entire postal service to an overseas equity investor,” Mr Ward of the CWU said.

However, Mr Kretinsky said that the postal unions “do understand that we are on the same ship, and that we need this ship to be successful, and that if we are there, we don’t have any real problems to deal with, because the sky is blue, and it’s blue for everybody.”

The union cannot stop this deal but the government can block it under the National Security and Investment Act.

Business Secretary Jonathan Reynolds has said he will scrutinise the assurances and guarantees given and called on Mr Kretinsky to work constructively with the unions.

Mr Kretinsky may say that he and the unions are ultimately on the same ship but, as things stand, they are not on the same page.

Who is Daniel Kretinsky?

Daniel Kretinsky started his career as a lawyer in his hometown of Brno, before moving to Prague.

He then made serious money in Central and Eastern European energy interests.

This includes Eustream, which transports Russian gas via pipelines that run through Ukraine, the Czech Republic and Slovakia.

He then diversified into other investments, including an almost 10% stake in UK supermarket chain Sainsbury’s and a 27% share in Premier League club West Ham United.

The Czech businessman is worth about £6bn, according to reports.

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