For the first time since the number of job vacancies were recorded in 2001, the Office for National Statistics (ONS) has announced that they topped 1 million in August 2021. Despite much speculation that it would be unemployment figures that would peak at this point, following the pandemic and the winding down of the furlough scheme, this comes as positive news and suggests growth in the jobs market and therefore the wider economy. But whilst the news indicates business confidence in recruiting, it has also brought into sharp contrast the issue with the availability of workers in the UK.
Drilling down on the sectors with the most vacancies, it is clear to see that some of the underlying issue is likely to stem from the Brexit process. Hospitality, logistics and manufacturing all have high numbers of posts available and yet these are also the sectors that have historically drawn significant proportions of their workers from overseas territories, specifically the EU. However, some have argued that Brexit is not the only cause of the problem and the lack of workers has been compounded by foreign nationals returning home during the pandemic, potentially only as a temporary or short-term measure. Therefore, we may have to wait to determine the true cause of the dearth.
Whilst a lack of physical workers may help to explain the record number of vacancies, there is also much debate about the skills shortage in the economy. Sectors, such as retail and hospitality were hit hard by the pandemic, cutting hundreds of thousands of posts, but whilst this has put people back into the jobs market, they do not necessarily have the skills for the vacancies which exists. A period of rebalancing will therefore have to be endured as individuals retrain and post 16 education providers pivot their offering to reflect the demands of a changing market. One prime example of this is the lack of qualified HGV drivers combined with the time required to qualify and the lack of test slots available. The government has stepped in, reportedly adding up to 10,000 extra driving test slots over the next year, but obviously this builds in a delay in plugging that demand.
Return to Pre-Pandemic Levels
As well as heralding a record number of vacancies, the ONS data also shows that the number of people in work has now returned to pre-pandemic levels, with more than 29 million on the payroll in August 2021. But this increase in employment is yet to hit the wider economy. GDP figures for July show a slight deceleration in growth (+0.1% growth in July*) meaning that the economy is still smaller than pre-pandemic levels (2.1% below Feb 2020*). It is hoped therefore, that more people in work will ultimately lead to an uptick in GDP activity.