Thursday 15 July 2021 11:18 am

Job vacancies rise above pre-pandemic levels after lockdown measures eased

Daily news reporter in City A.M.'s London newsroom

UK job vacancies rose to above pre-pandemic levels for the first time in 15 months, as average wages showed signs of growth.

New data from the Office for National Statistics (ONS) showed 862,000 job vacancies in April to June this year. The figure is almost 10 per cent higher than January to March before the pandemic last year. 

The greatest driver of this was the arts, entertainment and recreation sector, as the lifting of coronavirus restrictions allowed venues to operate once again.

Among the five sectors displaying record numbers of vacancies was accommodation and food, as the sector faces a shortage in skilled staff. Only one industry failed to show quarterly growth.

BCC head of economics, Suren Thiru, said: “The rise in vacancies confirms the ongoing struggle to hire staff. The recruitment difficulties faced by firms go well beyond temporary bottlenecks and with many facing an increasing skills gap, staff shortages may drag on any recovery.

“More needs to be done to ensure businesses have access to skills when these can’t be recruited locally, including access to rapid and agile training and re-skilling opportunities for adults in the workforce and a more flexible immigration system which allows firms to access the high and low skilled workers they need.”

According to early estimates, average monthly pay in June this year also rose 7.5 per cent compared with that of last year.

While the ONS recorded 7.3 per cent growth in total pay (including bonuses) and 6.6 per cent growth in regular pay (excluding bonuses), it said these rates had been skewed upward by the pandemic. A drop in the number of low paying jobs, such as in pandemic-struck retail and hospitality, pushed average earnings up.

Janet Mui, investment director at wealth manager Brewin Dolphin said this is a “headache for employers (and the Chancellor)” as the fastest bump in wages on record was “distorted by the pandemic”.

“That said, underlying pay growth is estimated to be running at 3.9 per cent to 5.1 per cent by the ONS, which is still strong and is likely to put near-term pressure on businesses,” Mui added.

Welcome news

Chancellor Rishi Sunak said: “As we approach the final stages of reopening the economy, I look forward to seeing more people back at work and the economy continuing to rebound.

“We are bouncing back – the number of employees on payrolls is at its highest level since last April and the number of people on furlough halved in the three months to May.”

While the number of payroll employees showed another monthly increase, up 356,000 in June to 28.9m, this remains 206,000 below pre-pandemic levels.

Martin Beck, senior economic advisor to the EY ITEM Club, says the boost to payroll numbers has “undone almost 80 per cent of the negative impact on payroll numbers since February 2020”.

He said, “the pandemic has left a relatively small negative impact on the labour market when set against the fall in GDP. And while the unemployment rate may creep up in the second half of 2021 as the furlough scheme winds down, joblessness likely peaked late last year.”

The UK unemployment rate dropped in the latest quarter as the easing of coronavirus restrictions continued to spark a gradual economic recovery.

The figures reflect early signs of recovery in the UK economy as the country looks ahead to the next stage of lockdown easing next week.

“This remains a remarkable result given the forecasts over the past year, where the economic downturn was thought set to drive unemployment towards either per cent or more, and even forecasts from the beginning of this year were anticipating six per cent” said James Sproule, chief economist of Handelsbanken in the UK.

Future of work

The government yesterday outlined guidance for workers to return to the office gradually from 19 July, when the work from home advice will end.

The new advice for employers includes calls for workers to reduce the number of people they have contact with, the use of face masks in some situations and ventilation checks in offices.

Business leaders today slammed the guidance for its mixed messages that have “done little to dispel confusion” over returning to the office.

While Sunak recently urged Brits to return to the office, saying doing so is “really important”, PM Boris Johnson said in his original announcement of the new rules that the government would take a hands-off approach to people getting back into the office.

Bosses criticised the government’s approach for its “patchwork requirements”, leaving businesses in the dark about what legal status the guidance has, and concerned about vulnerability under health and safety legislation, as well as how their policy fits within their insurance.

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