Bank deputy governor warns that weak hiring and job mobility can hurt UK productivity

A labour market can weaken without a sudden wave of redundancies. Bank of England deputy governor Clare Lombardelli says Britain's current problem is increasingly a low-hire, low-fire economy, in which existing workers retain jobs but people seeking a first position or a better match find fewer openings. She argues that this can damage productivity as well as employment prospects.

In a speech published on 10 November for a Bank watchers' conference, Lombardelli said weaker hiring was interacting with a longer-running decline in movement between jobs. People were changing employers less frequently and, when they did move, were less likely to change industry or enter work requiring different skills. The concern is not only the total number of jobs, but how effectively workers reach opportunities that use their abilities.

Job matching matters for wages and growth

Her analysis sets out three consequences. First, if the skills or circumstances of jobseekers do not fit available vacancies, higher unemployment may ease wage pressures by less than it did previously. Second, reduced mobility can stop workers progressing to more productive roles and make it harder for employers to recruit. Third, a less adaptable workforce can limit the gains from technological change.

Young people can be particularly exposed because the first step onto the job ladder becomes harder when employers are reluctant to hire. Low redundancy levels therefore do not establish that the market is healthy for new entrants. Equally, the speech does not say that every vacancy is unfillable or that job changes always raise productivity; it describes risks from the overall decline in matching and movement.

Artificial intelligence makes that ability to adapt more important, Lombardelli argues, because the tasks people perform and the skills employers need are changing. Benefits from AI depend partly on workers being able to move towards new roles. These are a policymaker's economic judgments, not a new hiring rule, an employment programme or a fresh interest-rate decision. The distinction matters: subdued hiring can protect current employment in the short term while still weakening access, progression and longer-term growth.