1:59 PM 12th October 2021
Labour Market Statistics: We Are Starting To See A Vacancy Paradox In Jobs Market
Image by Gerd Altmann
Commenting on this morning’s release of labour market statistics, Kitty Ussher, Chief Economist at the Institute of Directors said:
“Unemployment is now on a firm downward march. And, with the number of people reporting they are ‘away from work’ now at or even below pre-pandemic levels it seems unlikely that the end of the furlough scheme will cause the spike in unemployment that was previously feared.
“We are starting to see a vacancy paradox in the jobs market: record-high job adverts but still more people unemployed than there were before the pandemic. The answer appears to be that those people seeking work do not have the skills or availability that employers need. Businesses will be looking to the government to prioritise lifelong skills and retraining to help them find the teams they need to expand and grow.”
BCC Director of Policy, James Martin, said: Julian Jessop, Economics Fellow at free market think tank the Institute of Economic Affairs, said:
“With the number of employees working in the UK economy at the end of September climbing back to pre-pandemic levels, the overall UK labour market is showing some recovery. Businesses who have shown innovation and creativity to survive and rebuild from the pandemic should take much of the credit.
“But there remain very real difficulties under the overall numbers, with labour and skill gaps, rising cost pressures and an increasingly onerous tax burden showing that the Government needs to act now to improve business conditions.”
“Today’s figures show a second month with a record number of vacancies, now at more than a third above their pre-pandemic levels. With Brexit and the pandemic driving a more deep-seated decline in labour supply, businesses throughout the UK tell us they cannot access the skills they need even as their costs balloon.
“These recruitment difficulties are likely to dampen the recovery by limiting firms’ abilities to fulfil orders and meet customer demand. Business investment will then suffer, curbing any chance of a prolonged recovery.
“Expanding the Shortage Occupation List will help businesses access the skills they need when they can’t recruit locally in the shorter term, supporting them to create a truly high-wage and high-productivity economy in the longer-term.”
End of Furlough
“Furlough ended in September, and the impact of that decision may not be fully picked up in the latest data. Skills mismatches are very likely to limit how many of those seeking jobs after furlough can move into available roles.”
"Today’s strong employment data should help to calm fears that the UK is sliding back into recession, although they also make it harder to argue that interest rates still need to be held at an emergency low of just 0.1 per cent.
"The UK economy is continuing to create jobs at a rapid pace, with the number of payroll jobs increasing by another 207,000 in September. The broader Labour Force Survey measure of employment (which includes self-employment) is lagging behind, but buoyant demand for workers and record vacancies suggest it will catch up soon.
"Headline pay growth predictably slowed as the distortions from the pandemic faded, but the ONS estimates that the underlying rate for regular pay has picked up to between 4.1 per cent and 5.6 per cent. This is a decent increase in real terms – for now. However, price inflation is also set to accelerate, probably to around 5 per cent, and lower-income households in particular face a difficult winter."
Matthew Percival, CBI Programme Director for Skills & Inclusion, said:
“Companies have found hiring difficult this autumn and the official data is beginning to tell the same story, with the number of people on payroll exceeding pre-Covid highs and record vacancies.
“It's welcome that Government has set up a new taskforce chaired by Sir David Lewis to advise on the impact of supply chain disruption and labour shortages on the recovery. Business and Government working together is the best way to create the high-wage, high-skill, high-investment, high-productivity economy we all want to see.”