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Latest NewsJob creation and lossesLabour marketFurloughRecruitment & retention

Number of employees on payrolls grew after furlough ended

by Ashleigh Webber 16 Nov 2021
by Ashleigh Webber 16 Nov 2021 Shutterstock
Shutterstock

Fears about mass redundancies following the end of furlough have not materialised, official figures suggest, as the number of employees on company payrolls increased and the employment rate grew in the autumn.

The latest labour market figures from the Office for National Statistics showed that there were 160,000 more employees on company payrolls in October 2021 than the previous month, taking the total to 29.3 million.

The ONS suggested that it is possible that those made redundant after the furlough scheme ended on 30 September will be included in payroll Real Time Information (RTI) submissions – from where the data is derived – for a further few months while they work their notice periods. However, it said respondents to its business survey suggested that “the numbers made redundant [were] likely to be a small share of those still on furlough at the end of September 2021”.

The redundancy rate is currently at the same rate it was before the pandemic, at 3.7 per thousand workers.

The employment rate for July to September 2021 increased by 0.4 percentage points on the quarter, to 75.4%, driven by a record high net flow from unemployment to employment as the economy recovered from the pandemic. Some 304,000 people moved from unemployment into a job.

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Total job-to-job moves also increased to a record high of 979,000, largely driven by resignations rather than dismissals, during July to September 2021.

Gerwyn Davies, senior labour market adviser at the CIPD, said the figures showed that individuals were taking advantage of a “job-seeker-friendly” labour market and rethinking their career priorities after the pandemic.

“In response, employers should focus on improving how they develop and retain their existing workforce to prevent or reduce skill and labour shortages.

“This means employers need to look at the factors that improve retention beyond simply a competitive salary which include the quality of line management, the availability of different types of flexible working arrangements and opportunities to develop new skills and progress,” he said.

Average growth in total pay including bonuses was 5.8% in July to September 2021, and growth in regular pay excluding bonuses was 4.9% – both well above the rate of inflation.

Davies said that growth in the supply of labour over the past decade had “helped the economy avoid any pay-price spiral caused by an increase in the cost of living”.

Employers need to look at the factors that improve retention beyond simply a competitive salary which include the quality of line management, the availability of different types of flexible working arrangements and opportunities to develop new skills and progress” – Gerwyn Davies, CIPD

“However, the supply of EU workers and older workers is now at best plateauing, which suggests that the recent surge in price inflation could combine with increased recruitment difficulties to a devastating effect,” he warned.

Frances O’Grady, general secretary at the TUC said the fact that the furlough scheme had been so successful in protecting jobs was a “union success story”. She said that wages now needed to increase.

“Working people deserve a decent standard of living. That means fair working conditions and a wage they can raise a family on. But too many are struggling to make ends meet – including many of the key workers who kept the country going during the pandemic,” she said

“In the midst of a cost-of-living crisis, people deserve better. The government must give unions more power to negotiate better pay and conditions for all workers.”

The number of job vacancies in August to October 2021 continued to rise to a new record of 1,172,000, an increase of 388,000 from the pre-pandemic January to March 2020 level.

Fifteen of the 18 industry sectors monitored by the ONS recorded record numbers of job openings. The largest increase in vacancy numbers on the quarter was in wholesale and retail trade, with repair of motor vehicles and motorcycles, growing by 29,600 (24.8%).

Neil Carberry, chief executive of the Recruitment and Employment Confederation, said: “This latest data shows the labour market showing remarkable stability even as furlough came to an end. Vacancy numbers reached another new record high, and recruiters have been working hard to get people into jobs – but there are shortages in sectors across the economy, making their task harder than ever. Our own data shows employers have been raising starting salaries at record pace to try and attract the best candidates.”

Tony Wilson, director at the Institute for Employment Studies, said that although three quarters of a million people have started a new job every month since Covid restrictions were eased, the jobs market is currently at its tightest in “at least 50 years”.

“All told, we’ve nearly a million workers now missing from the labour market, and their absence is now holding back our recovery and adding to inflation. There’s little sign in today’s data that these problems are being driven by furlough or even Brexit. Instead they’re mainly being caused by older people who lost their jobs not going back to work, as well as by more young people staying in education,” he said.

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“These problems aren’t going to fix themselves in the near future, and we’re still doing nowhere near enough to help get people back into work, particularly for older workers, disabled people and parents.”

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Ashleigh Webber

Ashleigh is a former editor of OHW+ and former HR and wellbeing editor at Personnel Today. Ashleigh's areas of interest include employee health and wellbeing, equality and inclusion and skills development. She has hosted many webinars for Personnel Today, on topics including employee retention, financial wellbeing and menopause support.

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