The labour market has changed drastically over the past year but despite soaring vacancies, one in 20 people can't find a job and redundancies could be looming as the furlough scheme winds up.
A new study by business comparison firm Bionic has investigated where job vacancies and salaries are rising as the UK reopens after more than a year of lockdowns. It has found that the UK unemployment rate is at 4.7% even though job vacancies are being advertised in their millions.
The number of job vacancies being advertised on job boards across the UK hit a new high in June this year at 1,176,830 - that is more than double the number of vacancies that were being advertised just 11 months ago in July 2020.
"It's an issue that's been exacerbated by the pandemic," said Glyn Britton, chief customer officer at Bionic. "Given the number of people who lost their jobs or were placed on furlough at some point since March 2020, it's probably no surprise that UK job vacancies are peaking just as we're about to fully reopen again. What is surprising though is that the latest employment figures show one in 20 people who want a job can't find one."
The findings also reveal that unemployment levels vary significantly across the UK, with the rate in Wales 0.8% lower than the UK average at just 3.9% while London has an unemployment rate of 6.5%. Staff shortages are particularly acute in hospitality, haulage and IT.
The picture on salaries is more complex. Although remuneration has generally risen in the past year, average annual salaries peaked in February 2021 at £37,127 and have since dropped back to £34,265 in June 2021.
"The government has been at pains to get people back into the workplace … but the truth is that more people than ever have been given a glimpse of the better work/life balance that working from home can bring, and many won't want to go back to the way things were before," said Britton.
"To attract and retain the best employees, businesses are going to have to bear this in mind and offer flexible working conditions wherever possible - the technology is available for most businesses to make a go of this new hybrid way of working, but is the willingness there from individual business owners? If not, those staff shortages could be hitting more than haulage and hospitality."
However, the British Chambers of Commerce (BCC) has warned that widespread redundancies could be looming. Its research suggests than almost one in five firms are considering staff lay-offs as the next phase of furlough tapering begins. BCC asked over 250 businesses with employees on furlough what their response will be in August when employers' contributions to the scheme rise to 20% - the findings show that 18% could make staff redundant. In addition, a quarter said they planned to reduce staff hours or move employees to a part-time role.
Jane Gratton, BCC head of people policy, said: "[The] changes to the furlough scheme will likely result in many thousands of people being released back into the labour market, as employers who are still struggling to recover from the recession are forced to make redundancies and cuts to working hours … Whether furloughed workers are returning to the workplace or the wider labour market, it is crucial that employers and the government give them the support and training they need to be re-engaged and productive."
Written by Rachel Miller.