Businesses are scrambling to fill vacancies at a rapid pace despite the UK staring down the barrel of the longest recession since the financial crisis, revealed new figures published yesterday.
A shortage of workers partly driven by people dipping out of the jobs market due to Covid-19 related health issues and Brexit has intensified competition between firms to lure talent.
A shallower pool of available labour has largely shielded the jobs market from the broader economic slowdown.
An employment index produced by consultancy BDO climbed to 114.79 in July, its highest level since January 2019 and up 0.23 points from June.
Research published earlier this month by the Institute for Fiscal Studies found around 110,000 people have stopped working due to long Covid-19.
Strong demand for staff has pushed UK vacancies to record highs and held the unemployment low at 3.8 per cent.
However, barriers to filling roles and a lack of skilled workers has resulted in businesses forgoing opportunities to expand, analysts said.
“Although it’s encouraging to see recruitment intentions remain strong, we know that talent shortages are an issue, with many businesses reporting they are struggling to find people with the right skills,” Kaley Crossthwaite, partner at BDO, said.
Firms’ demand for staff will tank in the coming months caused by the UK tipping into a protracted recession driven by elevated energy bills, Crosswaite added.
Swelling costs will draw employers’ attention away from boosting staff levels to focusing on staying afloat, she added.
The Bank of England last week warned the economy is set to tumble into recession in the final three months of this year and stay there for five consecutive quarters, the longest slump since the downturn after the 2008 banking crisis.
Softening consumer spending caused by households responding to a more than 13 per cent inflation peak eroding their living standards will drag down the economy, the Bank said.
In one of the most gloomy forecasts ever produced by the central bank, Governor Andrew Bailey and the rest of the monetary policy committee essentially warned a recession is necessary to shake inflation, already running at 40-year high of 9.4 per cent, out of the system.
Over the course of the entire slowdown, the economy will shrink 2.1 per cent, a similar loss caused by the early 1990s sterling crisis-driven recession.