Pandemic shifted labour market to low-skill, low pay

Unemployed workers face more job opportunities that match their skills now than they did pre-pandemic, according to labour market research by the Institute for Fiscal Studies.

However, this is offset by the fact many of these roles are lower-skilled and lower-paid, the think tank said.

Its analysis of job data from Adzuna, combined with information from the government’s Labour Force Survey, shows that the mix of occupations being advertised is “rapidly returning” to how it was in 2019, albeit with a shift towards lower-paid roles such as drivers or warehouse workers.

It also found that the composition of roles available today may reflect the fact there is high turnover in the labour market at present, thanks to employers trying to backfill skills shortages due to Brexit and factors such as early retirement.

That said, the overall level of change in the mix of jobs on offer is “no greater than it was during the more ‘normal’ period between 2017 and 2019”.

The IFS found that the number of vacancies has been at least 20% above pre-pandemic levels since Autumn 2021.

However, some sectors have seen the number of vacancies increase at a higher rate. Vacancies for drivers were 80% higher in the five months to February 2022, and vacancies for warehouse workers had doubled. At the same time, demand for nursing and midwifery professionals declined when compared with pre-pandemic levels.

This does mean that job market opportunities have improved for lower-educated workers, however. Seventy percent of unemployed workers without a degree had more opportunities than they did pre-pandemic, compared to 44% of those with a degree.

Xiaowei Xu, senior research economist at IFS and an author of the report, said the shift towards lower-skilled occupations was “potentially concerning”.

“There are signs that vacancies today are still affected by transitory factors, for example pent-up demand for job moves over the pandemic and the fall in EU migrants, so it is possible that this will fade over time,” she said.

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“That said, the specific occupations that have seen large increases in vacancies – drivers and warehouse workers – are consistent with a shift in consumer preferences towards home delivery, which could indicate a more permanent change in labour demand.”

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