23 Apr What is the UK labour market looking like post-lockdown?
There is no doubt that Covid-19 has had a massive effect on the UK labour market. Due to subsequent lockdowns and the other restrictions that come with it, businesses have had to run at a reduced capacity, or stop trading completely, leaving employees in limbo over their job security and future job prospects.
Over a year and three lockdowns later, Kiwi Recruitment take a look at what the UK job market is looking like as we move further along the roadmap out of lockdown.
The government’s Coronavirus Job Retention Scheme has been doing its job in preventing mass redundancy across the industries. The House of Commons Library reported that by 15th March 2021, the scheme had been used to furlough 11.4 million jobs, protecting these workers from facing redundancy and unemployment.
Not every job has been possible to save though, with the number of people claiming unemployment benefits increasing by 1.4 million people between March 2020 and February 2021. Economists are also still warning of a spike in redundancies when the scheme comes to an end in September.
However, all hope is not lost. Since the first lockdown, businesses have adapted to working from home or in covid secure sites, meaning some have been able to operate in some form throughout the other two subsequent lockdowns. According to the ONS, in the week ending 14th March 2021, 53% of working adults in Great Britain had travelled to work, which is up from 30% of working adults in the week ending 14th June 2020. While there are currently no statistics available to reflect the most recent lifting of restrictions, this percentage can only have gone up as more businesses have been able to open their doors.
The early days of the pandemic has a significant negative impact on job vacancies with a record fall in the months between April and June 2020. Since then, however, the number of vacancies has been slowly but steadily recovering.
The KPMG and REC reported that in March overall job vacancies expanded at the quickest rate seen since August 2018. On the 12th March 2021 the volume of adverts listed on job search engine Adzuna was at 93% of its average level in February 2020, according to the ONS. This was the highest level of job adverts since the 12th March 2020, with increases in vacancies across all regions of the UK, signalling a rise in recruitment as restrictions begin to ease.
Temporary work has been hugely important in maintaining a strong labour market, with the number of temp workers increasing by 5.4% in the first quarter of this year according to the REC. Temporary work has supported businesses and workers alike throughout the pandemic and this is likely to be a continuing trend despite there still being some uncertainties. However, there has been a rise in permanent vacancies too, with the government’s roadmap helping to boost business confidence.
Despite this the KPMG and REC have said the candidate supply remained mostly stagnant in March 2021. While there were earlier reports that redundancies because of the pandemic could drive up the labour supply and competition in the labour market, this currently has been the case. The Coronavirus Job Retention Scheme has arguably had the biggest hand in offsetting this impact, but candidates are also reluctant to seek new jobs until the pandemic and economic situation improves due to fears over job security.
Skills Gap and a Rise in Salaries
It’s been reported March 2021 saw renewed rise in starting salaries for permanent roles, as well as a rise in hourly rates for temporary workers. This is likely due to supply of workers currently not rising with the demand.
Another contributing factor was skills gap that was also reported in March this year. Employers are currently finding big skills gaps across sectors, including IT, construction, and retail. If candidate supply continues to stagnate while demand continues to grow, this skill shortage could potentially grow, which could lead to a candidate driven market in some sectors.
While increasing pay will be attractive to potential candidates, salary is not the only thing they look at. Other factors such as workplace environment and career progression will also be more important now than ever to candidates. Businesses will need to focus on these factors to sell themselves as an employer to attract top candidates where there is a skill shortage.
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