As coronavirus restrictions come to an end, industries in the UK are experiencing the effects of the pandemic in different ways. While employment has fallen in some sectors, such as accommodation and food, in others, like public administration, new jobs have been created.

Common to all industries, however, is an increase in job vacancies, causing a tight labour market.

Employment has fallen in most industries

Although the furlough scheme helped prevent redundancies, in many industries employment levels fell over the pandemic. Data from the Office for National Statistics (ONS) shows that in October to December 2021, employment in the accommodation and food sector was still 11% below pre-pandemic levels and it was down 9% in the manufacturing sector.

Conversely, employment in the public administration and defence sector has increased by 15%. This is because of an increase of 74,000 jobs in public administration during the pandemic, many of which were created to help manage and oversee the response to Covid-19.

The chart below tracks employment levels in selected industries from March 2020 to October-December 2021.

A chart tracks employment levels in selected industries from March 2020 to October-December 2021
Source: ONS, EMP13: Employment by industry, 15 February 2022

Job vacancies have reached a record high

At the start of the pandemic there was a huge fall in the number of job vacancies. Total vacancies in April 2020 were down 54% on their pre-pandemic average level for April (PDF).

According to the Institute for Fiscal Studies, vacancies in almost every occupation fell by at least 20%.They fell the most in accommodation and food services, (93%), because of coronavirus restrictions. Only vacancies in sectors related to health, social care and education remained steady.

However, since April-June 2020, the ONS shows vacancies have been rising, reaching a record high of 1.3 million in November 2021-January 2022. This is an increase of 65.5% from pre-pandemic levels.

A chart shows vacancies reached a record high in November to January 2022
Source: ONS, VACS01: Vacancies and unemployment, 15 February 2022

Despite some industries having higher levels of employment than in January to March 2020, every sector now has vacancies above pre-pandemic levels, with accommodation and food services having the biggest increase of 112%.

The chart below shows the percentage change in vacancies from before the pandemic to January 2022 in each industry.

A chart shows the percentage change in vacancies from before the pandemic to January 2022 in each industry.
Source: ONS, VACS02: Vacancies by industry, 15 February 2022

The current level of high vacancies is accompanied by relatively low unemployment. This has led to a very tight labour market, where there is high demand for workers and recruitment becomes difficult, causing labour shortages in certain sectors. In January 2022, there were 1.1 unemployed people per every job vacancy, according to ONS data. This compares to 1.8 unemployed people per vacancy pre-pandemic.

The Institute for Employment Studies has said the demand for workers is holding back growth and may also push up inflation.

Why has there been an increase in vacancies?

The Institute for Employment Studies says labour shortages are largely due to the growing number of people who are economically inactive (not in work and not looking for work). They also reflect a decline in foreign workers in the UK who, because of a combination of Covid-19 and Brexit, have returned to their countries of origin.

The Institute for Fiscal Studies said the increase in vacancies has “been driven entirely by low-paying occupations,” with unappealing pay packages contributing to high vacancies.

Different industries also have specific circumstances which are contributing to labour shortages. For example:

How to get more people into work?

The Government has put in place  schemes to support people back into work, and most recently introduced a “Way to Work” scheme in which those receiving Universal Credit will be expected to search for jobs that go beyond their former occupation after four weeks of claiming. The Government says this is to get 500,000 benefit claimants into jobs by the end of June 2022 and address high level of vacancy levels across all sectors.

However, critics state the rise in job vacancies is not due to unemployed people failing to find suitable jobs, as unemployment is back to pre-pandemic levels.

Instead, some suggest the answer to labour shortages lies in persuading the economically inactive to enter the labour market. To do this, employers across industries may need to find a way to make jobs more attractive, whether through more inclusive recruitment, improved working conditions, increased flexibility, or better pay.

Further reading

About the author: Harriet Clark is a researcher at the House of Commons Library, specialising in labour market statistics.

Photo by Flow Clark on Unsplash

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