Surge in UK job vacancies driven by low-paying work, says IFS

Report says employment opportunities more than 10% below pre-pandemic levels for quarter of workforce

Britain’s worst labour market shortages in decades are being driven by employers struggling to recruit low-paid workers, research suggests, while vacancies in other areas are still significantly below pre-pandemic levels.

A report by Institute for Fiscal Studies said that new job opportunities remain more than 10% below pre-pandemic levels for a quarter of the workforce – about 8 million people – despite reports focusing on severe shortages of staff in several sectors of the economy such as road haulage, care and warehouse work.

It said a surge in job vacancies to record levels in recent months had been driven almost entirely by low-paying work, in which new job openings were about 20% higher than before Covid-19.

Figures showing record numbers of job vacancies have been taken as a signal by government ministers that Britain’s economy has come through the worst of the pandemic with the jobs market relatively intact.

Ministers have also suggested that closing the furlough scheme could help plug worker shortages, with hundreds of thousands of workers still thought to be receiving the pandemic support ahead of its removal at the end of this month.

However, the IFS said the outlook for jobseekers remained tougher than before the coronavirus pandemic, as there were more people looking for new work, meaning greater competition for vacancies.

It estimated that two-thirds of unemployed jobseekers were from occupations in which the competition for jobs was at least 10% higher than before the pandemic. “If some of the still-furloughed workers join the pool of unemployed jobseekers when the furlough scheme ends, competition would be stiffer still,” it said.

Instead, the boom in vacancies to record levels has been driven by a lack of lower-paid workers, such as in road transport and warehousing, with vacancies now 19% higher in those areas than before the pandemic.

Many firms have been struggling to recruit workers amid disruption in the jobs market caused by Covid and Brexit, and after years of low pay and conditions resulting in an exodus of staff.

Although the IFS report found a handful of high-profile staff shortages had been causing disruption for the supply of certain goods, the thinktank said there was little sign that workers’ bargaining power was beginning to rise across the board.

Some economists have suggested that staff shortages could feed through to wage growth for workers, with firms battling to lure staff using one-off joining bonuses and higher starting pay – a development that could lead to rising inflationary pressures.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Unions are pushing for better pay and conditions after the worst decade for average earnings growth since the 19th century. Analysis of online job postings suggest that starting pay is rising in some occupations, including among lorry drivers, care workers and warehouse staff.

However, Xiaowei Xu, a senior research economist at the IFS, said vacancy rates were being driven by a small set of modestly paid occupations. “While prominent stories about rising vacancies and labour shortages in certain areas are real, we should not be misled into thinking that worker power is back,” she said.

“For people in many lines of work, new job opportunities remain well below their pre-pandemic level. And it is not just the number of job openings that matters, but how many people are competing for them. After all the disruption of the past year, there are more people looking for work than before. Most jobseekers will therefore find job competition to be unusually stiff.”

• This article was amended on 21 September 2021 to correct statistics about employment opportunities in the second paragraph

Contributor

Richard Partington Economics correspondent

The GuardianTramp

Related Content

Article image
UK paid employment falls by almost 650,000 as Covid-19 crisis bites
ONS says number of workers on payroll fell 2.2% from March although rate of decline fell in June

Richard Partington

16, Jul, 2020 @7:23 AM

Article image
UK Covid-19 cases fall but fears grow over jobs, spending and debt
Analysis of pandemic’s effects on businesses examines work, growth and stock markets

Richard Partington Economics correspondent

30, Jul, 2020 @11:00 AM

Article image
UK unemployment reaches four-year high in Covid-19 lockdown
Jobless rate rose to 5%, or 1.7 million people, in three months to the end of November

Richard Partington Economics correspondent

26, Jan, 2021 @10:57 AM

Article image
More than a third of UK employers planning to make staff redundant
Report warns of a cascade of job losses as coronavirus furlough scheme winds down

Jasper Jolly

30, Sep, 2020 @11:01 PM

Article image
UK economy poised to recover after Covid-19 second wave
Our latest snapshot of key economic indicators shows the deficit soaring but unemployment holding steady

Richard Partington Economics correspondent

31, Mar, 2021 @5:00 AM

Article image
Jobcentre vacancies analysis reveals size of challenge facing unemployed

2.6 million jobseekers face competition for 234,000 full-time vacancies from people in temporary or part-time work

James Ball

08, Apr, 2012 @9:21 PM

Article image
New Covid-19 restrictions mean UK unemployment will get much worse
Bank of England forecasts for 7.5% unemployment this winter may have to be revised up considerably

Larry Elliott

22, Sep, 2020 @5:00 PM

Article image
New Covid variant and looming Brexit disruption deepen UK economic gloom
Our latest snapshot of key economic indicators show retail sales falling, job losses soaring, GDP growth and stock market stalling

Richard Partington Economics correspondent

23, Dec, 2020 @12:00 PM

Article image
Bank of England says economic shock of Covid-19 less severe than expected
Consumer spending rise cheers Bank but unemployment will double and GDP fall significantly

Richard Partington

06, Aug, 2020 @7:04 AM

Article image
Beware scaling back UK furlough scheme too soon, warns Resolution Foundation
Thinktank warns of ‘dangerous complacency’ with strength of jobs market and pay growth both weaker than thought

Jasper Jolly

27, Jun, 2021 @11:01 PM