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Livesquawk - Vacancies At Record High As Employers Struggle To Find Workers
Vacancies At Record High As Employers Struggle To Find Workers

- Payroll employees rise for ninth consecutive month
- Redundancies return to pre-pandemic levels
- Compositional and base effects still distorting wage measure



By Harry Daniels
LiveSquawk News

14 September 2021|11.30 GMT

London - The UK’s payrolled workforce is now back to pre-pandemic levels as the resilient labour market appears to have avoided the worst predictions about high unemployment. However, the job recovery appears uneven as the hospitality positions remain hard to fill.


The Office for National Statistics said the number of payroll employees showed another monthly increase, this time up 241,000 to 29.1 mln in August. Underlying figures said the number of employed grew 183,000 in the three-months July, which missed the 199,000 forecast but beat last month’s 95,000.


Unemployment also continued along its recovery trend. The ONS said the jobless rate fell a tenth of a percentage point on the month to an in-line 4.6%, 0.6 points higher than before the pandemic, but 0.3 points lower than the previous quarter.


Jonathan Athow, deputy national statistician for economic statistics, acknowledged the recovery to the employment outlook but noted the rebound remains uneven: “In hard-hit areas such as London and sectors such as hospitality and arts and leisure, the numbers of workers remain well down on pre-pandemic levels.”


The most striking development in the report was the high level of vacancies. The ONS estimated the number of open positions in June to August at 1.03 mln, the first time this metric has exceeded the million mark since records began, leaving it 249,000 above the pre-coronavirus pandemic level in January to March 2020.


Annual wage growth, although still elevated, slowed in the three months to July for both total and ex-bonus categories. Average weekly earnings three-month, year-on-year increased 8.3%, which was above the 8.2% forecast but off from the 8.8% previously. Excluding bonuses, the rate of 6.8% was in-line with forecasts but below June’s 7.4% read.

HSBC senior economist Elizabeth Martins noted, “We said last month that the June print probably marked the peak of UK wage growth in annual terms. That partly reflects base effects, but the 3m/3m annualised rate has also slowed a little too. Indeed, the pandemic-driven compositional effect is now starting to subtract from wage growth.”

According to the ONS, in real terms and adjusted for inflation, total and regular pay are now growing at a faster rate than inflation, at 6.0% for total pay and 4.5% for regular pay.


Government furlough programme still affecting labour force

So, within the report, there is plenty to be encouraged by. However, estimates from both the government and the ONS suggest approximately 1.5 mln people still remain on furlough with the government scheme expected to end by the end of September.  


HSBC’s Martins said, “We suspect this shortage of people played into the slowdown in growth in July. However, while the current conditions bode well for a relatively smooth end to the Job Retention Scheme at the end of September, we still think some rise in unemployment is likely.”


She said this poses something of a policy dilemma for the BoE. “A slowdown in growth is usually – and certainly in recent experience – a dovish signal. But a supply-driven slowdown is an inflationary, and hence hawkish, signal. We think that recent economic developments are consistent with our forecast for a 15bps rate rise in May 2022 and then a 25bps rise in November 2022.”