The number of people in work or looking for work in the UK has been shrinking while vacancies have been booming according to a new report*. Vacancies are 50% above pre-pandemic levels while the number of people of working-age who are neither in work nor seeking employment is 400,000 higher.
The most striking consequence of the pandemic has been the shrinkage of the UK workforce. Many people who lost their jobs are still not actively seeking work. Anxieties about a spike in unemployment as the Coronavirus Job Retention Scheme wound down proved to be unfounded. Job vacancies stood at 1.2 million by the end of December last year while the number of people on payrolls or looking for work is 750,000 lower than it would have been, had the rising trend over 2010-2019 continued. As the war for talent continues, the Labour Market Outlook revealed that staff and skills shortages, wage pressures and capacity constraints are all challenges employers will continue to face in 2022.
Most notably, there has been a rise in inactivity among men, especially those in older age groups. One of the main reasons is suspected to be that the Coronavirus Job Retention Scheme enabled people to re-assess their lives and make new decisions on whether they want to return to full-time employment. The Labour Market Outlook report reveals that salary is by far the most important aspect when applying for a job now demonstrating people are looking for real value in choosing to return to work.
This is followed by flexible working, especially in terms of hours and location. Other key factors include health & wellbeing benefits, childcare and L&D offerings. Career advancement is also a key issue. The research revealed that fewer than half of UK office workers believe their personal career development has continued throughout the pandemic.
Niki Turner-Harding, Senior Vice President, Adecco UK & Ireland commented: “Candidates now find themselves in a market where there is a huge amount of choice and vacancies are at an all-time high. They can choose an employer and job that suits their needs, from flexible working to temporary or permanent work. It is striking that people are choosing not to return to work so companies need to re-assess their value proposition to ensure talent retention. While there are more vacancies around than in previous years, employers are now having to work harder to recruit candidates.”
Tim Lyne, Associate Director Cities, Oxford Economics said: “The report highlights that the UK labour market is in good health but not yet fully healed. The workforce has shrunk and some sectors have been hard hit. However, Oxford Economics forecasts suggest that job prospects are buoyant for this year and next and we expect all regions to enjoy strong employment growth in the short term. As the economic recovery matures, regional labour markets will come under increasing pressure to meet the changing needs of employers, as the economy shifts towards higher-skilled, higher value services.”
The report also includes a breakdown of employment levels by region in the UK. The North East has a lower rate of participation in the labour market than most areas, a less qualified workforce and a greater proportion of workers employed in lower skilled occupations. These challenges, evident long before the pandemic, could hinder the region’s post-pandemic growth prospects. The restructuring of the economy in the region will mean many workers may need to acquire more skills, so providing upskilling and reskilling opportunities within organisations should be a key component of future business strategies.
The labour market prospects for the East of England are favourable, and the unemployment rate is set to continue to decline, reaching a long-term low by 2024. The region’s labour force also tends to have a relatively favourable skills profile, which should enable it to adapt as the economy transitions towards higher-end service-based roles.
While the labour force is lower than it should be as a result of the pandemic, employment growth is expected to pick-up in 2022, resulting in the creation of nearly half a million jobs over the course of the year. This is likely to lead to a recovery in labour market participation after 2021’s decline.
Employers will face a growing pressure to increase wages amid spiralling costs of living, but for organisations who can’t offer the highest salaries they must think outside the box in order to attract the upper echelons of talent. Upskilling and reskilling opportunities, flexible working and a positive and equitable workplace culture are all key to recruiting the right candidates to continue driving businesses forward.