From education to employment

UK economy struggles with a “labour gap” of nearly one million workers – UK labour market: October 2021

Lowest ever number of jobseekers chasing each vacancy, as labour shortages set new records – “We need urgent action at the spending review to improve support for older people, parents and disabled people”

This morning’s Labour Market Statistics confirm that the UK labour market now has the lowest ever number of unemployed people per vacancy – which is the key measure used in assessing the balance between labour demand and labour supply (or how ‘tight’ or ‘loose’ a labour market is). In June-August 2021 there were 1.45 unemployed people per vacancy, as job openings continuing to set new records while unemployment fell back. At the height of the crisis (April-June 2020) this figure was 4.1 unemployed people per vacancy; while before the crisis, in data stretching back to 1971, the figure has never been lower than 1.5.

Much of the focus in recent weeks has been on specific skills shortages related to HGV driving and Brexit. However today’s figures reiterate that these are labour shortages affecting the whole economy, and where likely between a quarter and a third is explained by lower migration. IES estimates that the UK now has a “labour gap” of 900 thousand, between the number of people in the labour market now and what would have been expected based on pre-crisis trends. This is being driven by large falls in participation for older people and young people, alongside continued wide employment gaps for disabled people and those with health conditions.

Commenting on the figures, IES Director Tony Wilson said:

“Today’s figures show that labour shortages are now affecting the whole economy, with fewer unemployed people per vacancy than at any time in at least forty years. We estimate that there’s nearly a million fewer people in the labour market than on pre-crisis trends, with this being driven particularly by fewer older people in work and more young people in education. These shortages are holding back our economic recovery, and won’t fix themselves by just exhorting firms to pay people more. Instead we need to do far better at helping some of the six million people who are outside the labour market because of ill health, caring or full-time study to get back into work. For government, we need urgent action at the spending review this month to improve support for older workers, parents and disabled people in particular, where we’ve spent less on employment support in the last year than the furlough scheme costed in a single week. And firms will need to do more too, particularly by improving how they advertise and recruit, but also in trying to meet people half way on job security, flexibility and workplace training and support.”

Stephen Evans, Chief Executive of Learning and Work Institute, said:

“Employment continues to recover strongly amid reports employers are struggling to fill the record 1.1 million vacancies. However, employment is still 657,000 below pre-pandemic levels and long-term unemployment is up almost 50%. With 3.2 million people either unemployed or wanting to work, we need to accelerate efforts to help people look for work and match people and jobs. At the same time, average earnings data are distorted by the effects of the pandemic while many households are hit by the rising cost of living and cuts to Universal Credit.

“Now is not the time to roll back support: in his spending review, the Chancellor needs to have a joined up plan to widen employment support and support households. In addition, employers need to review their offer to potential employees, including how to make more jobs accessible to people with health conditions and disabilities or caring responsibilities. Otherwise, with around one million people on furlough as the scheme ended, supply crunches risk doing long-term damage.”

John Thornhill, Chief Executive, LTE Group, said:

“The latest employment figures highlight that the UK is in urgent need of skilled young people and adults in order to grow the post-Covid economy.

“While overall employment continues to increase, and is now back above pre-pandemic levels, this headline figure masks a surge in vacancies across all sectors, with the number of jobs advertised between July and September reaching a record high of over 1.1 million.

“Our focus must be on delivering a high-pay, high-productivity workforce. The further education and skills sector has the expertise required to deliver on the government’s pledge to ‘level up’ the country, and we at the LTE Group are determined to do our part.”

Walid Koudmani, market analyst at XTB comments:

“Today’s data from the labour market continued to show further signs of recovery, with the number of payroll employees showing another monthly increase, up 207,000 to a record 29.2 million in September 2021 and managing to return to pre-pandemic (Feb 2020) levels.

“However, the number of job vacancies in July to September 2021 reached a record high of 1,102,000, leading to the second consecutive month that the three-month average has risen over one million. While overall these are certainly encouraging signs from the economy, it will be essential to resolve the issues of supply shortages, rising fuel prices and labour shortages to ensure the continuation of the recovery moving forward.”

Minister for Employment Mims Davies MP said:

“With unemployment falling once again, and another record rise in the number of workers on employer payrolls, it’s clear our plan to create, support and protect jobs is working.

“As we enter the next phase of recovery, the £500m boost to our Plan for Jobs will continue to deliver more skills and opportunities for people up and down the country whilst crucially helping to fill vacancies across growing sectors as we push to build back better.”

Chancellor of the Exchequer, Rishi Sunak said:

 “As we move to the next stage of our support, it’s encouraging to see our Plan for Jobs working – the number of expected redundancies remained very low in September, there are more employees on payrolls than ever before and the unemployment rate has fallen for 8 months in a row.

“We remain committed to helping people find great work, with an extra £500m to support hundreds of thousands back into employment and help the lowest paid to progress in their careers.”

Steve Haines, Director of Public Affairs at youth charity Impetus is urging the Government to aid the economy’s recovery by supporting young people into work:    

“There are still 636,000 fewer people in employment than before the pandemic. A big part of this is the number of young people who are long-term unemployed, those that have been out of work for over six months, which remains stubbornly high at almost 200,000.

“With a record number of vacancies for a second month in a row, it’s clear these young people are facing barriers beyond there being an adequate number of job openings. We need to see a renewed commitment from the Government and work together to do what is needed to give these young people the support they need to find work – it’s what they deserve and the economy needs it.”

Welsh Economy Minister Vaughan Gething said:

“Today’s figures are encouraging, showing the unemployment rate in Wales remains below that of the UK, and our employment rate continues to increase.

“The Welsh Government is fully committed to backing firms and jobs. We’ve pulled every lever possible during the Covid 19 pandemic, which has been an incredibly difficult  period for the Welsh economy. The support we’ve made available to businesses across Wales has made a significant difference.

“But the Coronavirus pandemic is not yet over. We’re disappointed the UK Government has prematurely withdrawn support for individuals and businesses, with the complete withdrawal of the Coronavirus Job Retention Scheme, and the £20 a week Universal Credit Top-up being cut. In addition, the UK’s Government’s response to departure from the EU is continuing to cause issues for businesses and individuals across Wales.

“Despite this, the Welsh Government is committed to working with companies across Wales to help them protect existing jobs and to create new jobs in the industries of the future. Our new Export Cluster Programme aims to create a strong, vibrant and sustainable exporting sector to help strengthen the economy, safeguard existing and create new jobs and opportunities for people in Wales. Anyone recently made redundant can access our ReAct funding for training and courses, which is available through the Working Wales service.”

Ann Swain, Chief Executive of APSCo said:

“We’re seeing a continued demand for new skills across the professional staffing sector that is both positive and concerning. While it’s encouraging to see vacancy and placement numbers increasing, we’re all too aware that skills shortages are rife across every industry. Where there’s a limited availability of skills – and an unattractive visa route that fails to encourage non-UK nationals into employment in the country – employers are going to have to be more creative at attracting top talent. Salary is obviously a major draw but increasingly, benefits that facilitate flexible working and a work life balance are becoming increasingly sought after. While the staffing sector is equipped to support UK employers as the economy continues to bounce back, in the current environment, securing the best skills is going to require the appropriate investment – and that’s not always just about money.”

Estimates of employment, unemployment, inactivity, average weekly earnings, vacancies and other labour market related statistics for the UK.


UK labour market: October 2021

Labour market statistics time series: October 2021

Labour market in the regions of the UK: October 2021

Earnings and employment from Pay As You Earn Real Time Information, UK: October 2021

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