The UK Employment Market shows strong signs of improvement

Posted on 7 Sep 2022

One aspect of UK economy hit hardest by the pandemic was the job market, but it’s finally showing signs of recovery.

Figures collected by the Office for National Statistics and reported by the BBC showed that in June there were 862,000 jobs advertised, a rise of 77,500 compared to the first three months of 2020. Whilst we should express caution over the accuracy of this data, it undoubtedly reflects a positive shift for the UK employment industry after the uncertainty of the pandemic and lockdowns.

But what industries are driving this? What effect is it having on employers? And what problems does a surge in demand for employment bring?

The BBC reports how the increase in job adverts has been driven partly by the easing of lockdown restrictions. It points to the reopening of hospitality industries, such as food and arts venues, as a factor in this. Reduced restrictions have also contributed to a rise in demand for retail jobs, as more people return to shops in person. This should hopefully help to reduce the numbers of young people, as the demographic hit hardest the pandemic, currently unemployed.

Unsurprisingly, the increase in demand for employment has also had a positive impact on UK payroll figures, which has seen an increase of 356,000 to 28.9 million. This is despite the ending of the furlough scheme, which will be phased out in September. As Xiaowei Xu from the Institute of Fiscal Studies points out, employers have already been paying workers by the furlough scheme, so it’s understandable that they want to retain them.

In fact, the BBC discloses how planned redundancies are at their lowest since 2015, with ten times fewer jobs at risk than this time 12 months ago. This reflects the ongoing trend reported by employers that planned redundancies have been falling since September 2020, even with the interruption of two lockdowns during this period.

But is this all good news for employers?

Rising demand for employment does not guarantee filled posts, and there have been numerous news reports suggesting that positions are being left vacant. As a result, employers are having to think outside the box to find applicants.

To overcome this, employers should be more creative in their job advertisements, to find people in what is already a competitive market.

So what is the long-term impact of COVID-19 on employment?

Hopefully, shortages should only be temporary and confined to a few sectors, but there’s no guarantee that the job market will ever return to its pre-pandemic status. For example, will people want to take jobs in hospitality or the arts, after the uncertainty those sectors have faced in the past year? The pandemic will live fresh in the memory for many for a long time yet.

Also, lockdowns have had a big impact on our habits, including a seismic shift to online shopping. So, whilst the retail sector is posting advertisements, will there be enough people to take them? And if they do, will this only be a short-term solution to employment levels, as more shops on our high streets inevitably face problems? In years to come, we could see a number of people retraining or entering new sectors, to provide job security.

And what about the IT sector?

Job vacancies are also on the increase in the IT sector, but this isn’t something caused by the relaxation of restrictions. Vacancies have instead been on a sharp upward trajectory since the beginning of the pandemic. In fact, in a recent report conducted by the CIPD and reported by Computing, ICT is the sector with the biggest number of vacancies, beaten only by healthcare.

Rhona Carmichael, Regional Managing Director UK North and Ireland at Harvey Nash, in discussion with Computing, claims that the current problems in the IT recruitment industry is “the worst she’s seen”.

But what factors are causing these recruitment difficulties? Carmichael identifies how candidates increasingly want to choose how they work, such as remotely or in a hybrid format, as well a drive towards taking jobs with companies that share their vision and values, are making the IT recruitment market increasingly competitve.

Consequently, salaries for IT professionals are rising rapidly, jobs are being accepted quicker, and employers are having to work harder to create a rapport with candidates just to get their offers accepted.

And this isn’t just a problem in the UK. Jacqueline de Rojas, President of techUK, states how the difficulty in IT recruiting has now become a global problem, and identifies how “the skills gap and the talent gap has widened”.

We’d love to hear from you so if you are struggling to fill posts in your organization, feel free to get in contact and share your challenges.