Unemployment falls as talent shortage grows
REED chairman urges 3 million furloughed employees to leave zombie firms
The latest ONS Labour Market estimates from February to April 2021 continue to show signs of recovery, with a quarterly increase in the employment rate of 0.2% to 75.2% and a quarterly decrease in the unemployment rate of 0.3% to 4.7%.
The number of payrolled employees has increased for the sixth consecutive month, up by 197,000 in May 2021 to 28.5 million – although this is 553,000 below pre-pandemic levels. The number of job vacancies in March to May 2021 was 758,000, only 27,000 below January to March 2020.
While annual growth in average employee pay has continued to increase, the ONS attributes this to a fall in the number and proportion of lower-paid employee jobs. Growth in average total pay (including bonuses) and regular pay (excluding bonuses) among employees was 5.6% for the three months February to April 2021.
Govt support still needed
Commenting on these latest figures, Neil Carberry, Chief Executive of the Recruitment & Employment Confederation, said: "This latest official data confirms the trends that surveys of businesses and recruiters have been telling us. The jobs market enjoyed a strong bounceback during the initial phases of unlocking.
“But with labour shortages across the economy, any delays in hiring could have serious consequences for the recovery. Now that there is a delay to the final stage of unlocking, employers need digital Right to Work checks to remain in place to help them place staff quickly and in line with public health guidance. Government must also extend the targeted support measures that have been in place alongside the restrictions."
Tania Bowers, Legal Counsel and Head of Public Policy at the Association of Professional Staffing Companies (APSCo), said: "While the ONS data shows that we're not yet back to pre-pandemic levels, the consistent increases are in line with our own data which showed that permanent vacancies in May were up 116% compared with the same time last year (up from 90% in April).
"However, when we look at who has been most effected by the decline in jobs during the pandemic, the fact that under 25-year-olds have been hit particularly hard is of concern for future skills development. Our members are already noticing a dearth of resources in highly skilled sectors particularly across STEM related roles. With employers already beginning to feel the impact of post-Brexit skill losses, committing to the training and development of talent both young and old will be crucial in helping the UK build back better.”
Offering a perspective from the UK’s largest recruitment firm, James Reed, Chairman of REED, said: “The latest ONS employment figures do not begin to describe the ‘jobs boom’ that is now underway in the UK. This dramatic change has happened very quickly and will not be apparent from historic data. The talk now will be all about labour shortages, skills shortages and wage increases.
“The key questions are, how fast will the economy grow? And to what extent will progress be limited by labour market constraints? “Last month was reed.co.uk’s best month for job postings since February 2008 – before the last financial crash. Over 275,000 jobs went onto reed.co.uk in May, a 26% month-on-month increase and a 237% year-on-year increase.
“However, the recovery could be curtailed if staff shortages are not addressed urgently. The huge number of workers still on furlough – up to three million by the end of April – is at odds with a labour market which is now growing rapidly and facing a candidate deficit in certain sectors. As a result, we could see wage inflation, making it an ideal time for furloughed workers to depart zombie jobs and seek new opportunities elsewhere.”
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