Bouncing back: Employment at pre-Covid levels
eMPLOYMenT has surged back to pre-Covid levels as the economy recovers from last year’s historic slump.
A total of 29.1million workers were on company payrolls at the end of August, according to data from the Office for national Statistics.
This was up 241,000 on the previous month and just above the levels seen in February 2020 before the pandemic struck.
And there was still hope for workers who found themselves out of a job, as vacancies between June and August hit a new record high of 1.03million.
This was the first time job vacancies have ever surpassed 1million, fuelled by businesses reopening following Covid lockdowns and a recruitment drive to cope with resurging demand.
The fierce competition to attract workers has led many employers to offer generous pay packages – including signing-on bonuses worth thousands of pounds.
Average pay in May to July was 8.3 per cent higher than in the same period a year earlier, taking weekly earnings to £542.
Danni Hewson, a financial analyst at investment platform AJ Bell, said: ‘The UK jobs market has been stuck into a blender and whizzed up on high speed.
‘Considering the incredible disruption caused by the double whammy of Covid and Brexit, it is rather incredible the situation is looking as healthy as it is.’
Unemployment has not ventured near the 9 per cent predicted by the Bank of england when the pandemic hit last year. At 4.6 per cent between May and July, it had almost edged back down to pre-pandemic levels of 4 per cent.
And it is well below the peak pandemic jobless rate – which topped 5 per cent last year.
But Mike Cherry, national chairman of the Federation of Small Businesses, warned that although the figures were encouraging, they didn’t reflect ‘the lived reality’ for many small businesses.
He added: ‘Labour costs are rising, skills shortages are making it harder and harder to recruit, and several regions and sectors are struggling to find their feet.’
Speaking about the furlough scheme, which was supporting around 1.6million workers at the end of July, Mr Cherry continued: ‘With the end of furlough only weeks away, policymakers cannot afford to be complacent...
‘It’s the smallest employers, and their teams, that will bear the brunt of furlough’s wind-down.’
However, experts predict that even when the scheme ends later this month, it will have little impact on the jobless rate.
ellie Henderson, an economist at Investec bank, said they anticipated ‘only a modest effect on the labour market’.
But she warned: ‘With around 10 per cent of furloughed employees losing their jobs, we do acknowledge the uncertainty surrounding this view – especially given the risk of a skills mismatch between vacancies and those searching for employment.’
She pointed out, for example, that many of the vacancies are for positions such as HgV drivers, which many of the furloughed workers who lose their jobs will not be trained for.