LABOUR MARKET PICKS UP BUT FIRMS FACE STAFF SHORTAGES

BRITAIN’S unemployment is falling as the nation’s Covid-hit economy reopens – but vacancies are soaring as businesses struggle to recruit sufficient staff, official data showed last Thursday (15).

The unemployment rate dipped to 4.8 per cent in the three months to the end of May, the Office for National Statistics said in a statement. That was down from five per cent in the three months to February, the ONS added.

Unemployment remains 0.9 percentage points higher than its pre-pandemic level. But the labour market has picked up since March as a result of the economy’s phased reopening, with England set to fully exit lockdown next Monday (26).

The ONS added that the number of employees on payrolls soared by a record 356,000 in June. “As we approach the final stages of reopening the economy, I look forward to seeing more people back at work and the economy continuing to rebound,” said chancellor Rishi Sunak.

“We are bouncing back,” he added. However, sectors like hospitality have faced difficulty recruiting staff, impacted also by Brexit since the start of the year.

Job vacancies jumped to 862,000 between April and June, rising by 77,500 from the first quarter.

The number of vacancies is now above its pre-pandemic level from early 2020, and stands at a three-year peak. “The labour market is continuing to recover, with the number of employees on payroll up again strongly in June,” said ONS director of economic statistics Darren Morgan.

However, “the number of job vacancies continued to rise very strongly”, Morgan said.

“The biggest sector driving this was hospitality, followed by wholesaling and retailing,” he added.

The Confederation of British Industry (CBI), a powerful business lobby, said soaring vacancies were a sign of recovering demand in Britain’s Covid-battered economy. It added that staff shortages had been sparked only partly by employees self-isolating owing to spiking Covid infections.

“Vacancies exceeding pre-Covid levels is a further sign of demand returning and employers creating jobs,” said CBI official Matthew Percival.

“Yet businesses’ ability to meet this demand, and support the recovery, is being challenged by staff shortages. “As Covid cases rise, firms are facing the double difficulty of hiring workers and more employees self-isolating.”

Economists meanwhile expect the UK unemployment rate to jump once the government ends its costly furlough scheme at the end of September.

Under furlough, prime minister Boris Johnson’s administration has paid the bulk of private sector wages since the start of the pandemic.