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Latest NewsJob creation and lossesLabour marketPay & benefitsRecruitment & retention

Vacancies at record level amid ongoing staff shortages

by Ashleigh Webber 17 Aug 2021
by Ashleigh Webber 17 Aug 2021 alice-photo / Shutterstock.com
alice-photo / Shutterstock.com

The number of job vacancies has continued to surge, but the number of employees on company payrolls is still far below pre-pandemic levels.

Vacancies reached a record high of 953,000 in May to July 2021, having grown by 290,000 compared with the previous quarter and by 168,000 compared with January to March 2020, according to the Office for National Statistics.

However, the labour market continued to tighten and there was a quarterly increase in the employment rate of 0.3 percentage points, to 75.1% in April to June 2021, along with an 0.2 percentage point decrease in the unemployment rate to 4.7%.

Although the number of employees on organisations’ payrolls increased by 182,000 to 28.9 million in July, there were still 201,000 fewer people on payrolls than in February 2020.

Redundancies decreased on the quarter in April to June 2021 and returned to pre-pandemic levels. The redundancy rate per 1,000 employees was 3.6%.

Jonathan Boys, labour market economist at the CIPD, said the availability of jobs was likely to mean that the withdrawal of the furlough scheme next month would be “relatively painless”.

“Recruitment and importantly retention are picking up the slack. Industries with the biggest surge in vacancies are the ones that used furlough the most, including arts and entertainment, and hospitality,” he said.

“Vacancies are a forward-looking indicator due to lead times in recruitment, so we can be confident that employment will continue to increase over the coming months which coincides with the end of furlough. The redundancy rate is back to pre-pandemic levels which is another positive sign that the end of furlough will be relatively painless with minimal job losses.”

However, Recruitment and Employment Confederation chief executive Neil Carberry warned that record vacancy numbers emphasised the risk posed by labour shortages in many sectors.

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“These shortages are a long-term issue that pre-dates the pandemic and businesses need to realise that they are not simply going to fade away,” he said.

“Employers will have to improve workforce planning, invest in skills and improve their offer to candidates if they want to hire. Many are already doing this, acting on the expert advice of recruiters.

“But they will also need help from government to solve this issue. That means an effective, long-term plan on skills and training, and an immigration system that has the flexibility to meet employers’ needs.”

British Chambers of Commerce head of economics Suren Thiru said: “Record vacancies confirm ongoing recruitment difficulties.  Although labour demand is currently robust, with firm’s finances still recovering from Covid and skills mismatches likely to limit the extent to which those seeking jobs after furlough can move into available roles, unemployment may still drift somewhat higher in the near term.”

Pay continued to grow as organisations sought to lure talent. Growth in average total pay including bonuses was 8.8% and regular pay excluding bonuses was 7.4% in April to June 2021. However, the ONS warned that interpreting real average earnings data is currently difficult because of the effect of furlough and falling wages in 2020.

Vacancies are a forward-looking indicator due to lead times in recruitment, so we can be confident that employment will continue to increase over the coming months which coincides with the end of furlough” – Jonathan Boys, CIPD

Joanne Frew, head of employment law at DWF, noted that the figures related to a period when the UK was still subject to Covid-19 restrictions. The combination of removing lockdowns, rolling out vaccinations and the easing of self-isolation restrictions on 16 August should help to boost labour market activity, she explained.

“However, the true test will be at the end of September 2021 when the Coronavirus Job Retention Scheme is withdrawn. The question will be whether the two-month period with no restrictions has been sufficient for employers to build momentum and limit job losses,” said Frew.

“Employers will inevitably face further challenges and opportunities as we enter the autumn, from sickness absence to new ways of working.  Those that have been able to diversify and adapt to the unprecedented period of change will find themselves in the strongest position.”

Research from workplace change consultancy MovePlan and headhunting firm Hanson Search has found that almost half of UK business leaders fear their best talent relocating overseas following the pandemic and Brexit, while 30% of employees are considering alternative career paths.

Alice Weightman, founder of Hanson Search, said: “The creation of new working practices that are practical and inclusive, as well as offering an inspiring vision for the future is no easy task to navigate, yet it is undoubtedly one of the most important issues on the business agenda today.

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“With the war on talent heating up and a noticeable shortage of skills across industry sectors, those that get it right, will be at an advantage. Businesses that move in step with their employees and create an environment where learning, diversity of thought and approach is celebrated rather than stifled, will be on the front foot of attracting the best talent for the future.”

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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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