Job vacancies hit record high, but job hunters may still struggle

There were 953,000 job vacancies in May-July 2021 – 290,000 above the April-June rate, and 168,000 more than its pre-pandemic level in January-March 2020. This is the highest figure since records began 20 years ago.

Vacancies were 21.4% above the pre-pandemic level.

The experimental single-month data topped 1 million for the first time in July.

There was also a record high net flow of 299,000 from unemployment to employment.

Early payroll estimates for July show the number of employees has risen for the eighth consecutive month, up 182,000 to 28.9 million, but it’s still down 201,000 from before the pandemic.

Sarah Coles, personal finance analyst, Hargreaves Lansdown: “The reopening of the economy this summer has meant a recruitment bonanza, but while this means thousands of people can go back to work doing jobs they know well, in other cases it’s going to be far more complicated. It’s one reason why despite an overwhelming number of vacancies, there are still fewer people in work than before the pandemic hit.

“Job vacancies have reached a record high in 10 of the 18 industry sections, and boomed way above the pre-pandemic level.

“In many cases, we’re seeing people who had been laid off early in the pandemic finally get back into work. The beleaguered arts, entertainment and recreation sector has seen job adverts rise 267%, and food and accommodation adverts are up 164%. Most impressively, accommodation and food vacancies are now 39.1% above the pre-pandemic level.

“But in other cases, filling those vacancies is not so straightforward. Some roles that employed large numbers of overseas nationals have seen potential employees move away from the UK, either as a result of Brexit or the pandemic. It’s one reason why human health and social work vacancies are 19.1% above pre-pandemic levels, despite the fact that companies haven’t been laying people off in vast numbers over the past year, as many were essential workers. Without this vital group of potential employees, these industries may struggle to fill these roles.

“On the one hand, a shortage of employees could mean wages for care roles get a much-deserved increase. On the other, it could increase the cost of care for people paying for it privately, and in the interim it’s going to mean interruptions in the continuity of care that’s so vital for vulnerable people.

“We’re also seeing some jobs change as industries have adapted to the way the pandemic has transformed our lives. Take John Lewis, for example, it has seen a massive shift to online sales during the pandemic, so has had to change the way it works. It closed stores and announced the loss of thousands of jobs in head office and on the high street. Now it’s taking on a new distribution centre and advertising hundreds of new roles to the warehouse and delivery processes. Not everyone who worked on the high street is going to flow naturally into these alternative roles, which could mean large numbers of vacancies at the same time as people struggle for work.”

Average pay rises hit double figures in the private sector, and 2.8% in the public sector

  • Average total pay (including bonuses) was up 8.8% in a year and regular pay (excluding them) was up 7.4%.
  • Average total pay growth for the private sector was 10.1% in April to June 2021, while for the public sector it was up 2.8%.
  • Stripping out compositional effects and the base effect on wage rises gives underlying regular pay growth of between 3.5% and 4.9%.

Sarah Coles, personal finance analyst, Hargreaves Lansdown: “Annual pay rises are up again, to 7.4%, which is going to put the triple lock under even more pressure. The fact that most people haven’t seen anything like this kind of pay rise is bound to raise the issue of fairness between those who are working and those who are drawing their pensions. It makes some kind of smoothing of the wage measure in the triple lock even more likely.

“The official figure bears little resemblance to reality for most people. There are enormous variations around the country and in different industries. One of the most striking is between the public and private sector: in the private sector, annual wage growth is just 2.8%.

“The overall figure is also driven by so-called compositional effects, where fewer lower paid jobs available naturally pushes the average higher. It’s also driven by the ‘base effect’, which is the fact that a year ago hours had dropped dramatically and millions were on furlough so weren’t getting their full pay.

“If you strip both of these things out of the figures, pay rises were as low as 3.5%, which is far more typical. In fact, if you take the pandemic out of the equation, and measure wage growth over the past two years, pay has followed a gradual and steady upwards path over the long term, and recent rises have followed a similar pattern.

“If the government sticks with the triple lock, wage rises will mean pension rises of close to 10%. This would be a striking contrast to the 2.8% that essential workers in the public sector have seen over the past 12 months.”