UK job vacancies rise above 1 million for first time

Worker numbers rebound to pre-pandemic levels after biggest jump in employment since 2014

An employment agency, 'ExtraStaff', in North London. Unemployment dropped to 4.6% in the three months to end-July. Reuters

The number of workers on UK payrolls climbed above pre-pandemic levels as vacancies hit a record high and companies struggled with staff shortages caused by Brexit and the fallout from the pandemic.

British employers added a record 241,000 staff to their payrolls in August, while job openings surged 35 per cent in the three months to August to 1.03 million, the first time they have climbed above 1 million since records began in 2001. Vacancies rose even higher in August, to 1.12 million, according to the Office for National Statistics.

Meanwhile, unemployment dropped to 4.6 per cent in the three months through the end of July, from 4.7 per cent in the second quarter, as the economy reopened further.

However, the outlook remains clouded, with the government's furlough jobs support scheme ending soon.

Chancellor of the Exchequer Rishi Sunak said the latest jobs data showed the unemployment rate has fallen for seven months in a row, while the number of employees on payrolls is back above pre-pandemic levels.

“There were fewer potential redundancies notified in August than at any point since the start of last year,” Mr Sunak said.

“As we continue to recover from the pandemic, our focus remains on creating opportunities and supporting people’s jobs.”

In the three months through July, the number of people in employment, which includes the self-employed as well as employees, rose by 183,000.

July also marked the peak of a so-called “pingdemic,” when hundreds of thousands of staff were forced to self-isolate after being alerted by the National Health Service mobile phone app of close contact with a positive Covid-19 case.

The total number of employees in August was about the same level as before the pandemic, said Jonathan Arhow, deputy national statistician for economic statistics, but more than a million people are still on furlough.

“However, this recovery isn’t even,” he said. “In hard-hit areas such as London and sectors such as hospitality and arts and leisure the numbers of workers remain well down on pre-pandemic levels.

“The overall employment rate continues to recover, particularly among groups such as young workers who were hard hit at the outset of the pandemic, while unemployment has fallen.”

Average weekly earnings in the three months to July were 8.2 per cent higher than a year earlier, although the ONS said this was heavily distorted by pandemic and furlough-related effects.

Kitty Ussher, chief economist at the Institute of Directors, said the economy is now “well prepared for the end of furlough”, with unemployment on a clear downwards trend.

Danni Hewson, financial analyst at AJ Bell, said the positive UK jobs data is “incredible” considering the disruption caused by the double hit of Covid and Brexit.

“But some of those positives are masking huge issues. Recovery has been uneven and there are big questions about how all those jigsaw pieces, pieces which no longer fit in a changed puzzle, will be slotted back into place,” she said.

“Pay can’t be the only solution. Training will be crucial and some businesses are already considering candidates without the requisite skills, prepared to offer training because the other option is simply unworkable.”

Not all sectors are flourishing. The hospitality sector has the highest proportion of employers reporting their job openings are hard to fill, while in the retail sector the number of jobs dropped by 89,000 in the second quarter compared to the same period last year, despite strong sales.

“The industry has been weighed down by continued low footfall in shopping centres and city centres, the rising number of vacant shops, and competition for jobs from the hospitality sector,” said Helen Dickinson, chief executive of the British Retail Consortium.

“Meanwhile, the number of furloughed workers continue the fall in retail, with the latest figures showing 106,000 still on the government scheme. The decline in retail employment is reflected in the chronic shortage of key retail jobs such as HGV drivers and distribution centre staff. This has left some retailers facing supply chain challenges, resulting in some empty shelves.”

Matthew Percival, director of people and skills at the Confederation of British Industry, said there are temporary and immediate measures the government must take to ease some of these pressures.

“In the longer term, this means increasing investment in reskilling, automation and improved pay and conditions. But these steps take time to have impact, so we need a functional Shortage Occupation List too, so that firms can temporarily fill the most significant vacancies,” said Mr Percival.

“Government needs to immediately begin a review of shortages and accept the Migration Advisory Committee’s recommendations from last year to add extra jobs to the list”.