Employers facing ‘tightest labour market in 50 years’, warns Institute for Employment Studies

This morning’s Labour Market Statistics, covering September to November 2021 show that despite unemployment continuing to inch down, employment is unchanged on the figures reported last month.

Meanwhile ‘economic inactivity’ – the measure of those neither looking nor available for work – continues to rise.

Employment overall is now 600 thousand lower than it was on the eve of the pandemic.

The Institute for Employment Studies (IES) estimates that there are now 1.1 million fewer people in the labour market overall than there would have been had those pre-crisis trends continued.

Three fifths of this gap is explained by fewer older people in work, especially older women. At the same time, the number of people who are out of work due to long-term ill health has risen to its highest since 2004.

This weak recovery in employment is despite record levels of vacancies – and so is driving growing recruitment problems and labour shortages. There are now just 1.1 unemployed people per vacancy – the lowest figure in at least fifty years. A year ago, there were more than three (3.2) unemployed people chasing each job.

Commenting on the figures, IES Director Tony Wilson said: “Today’s jobs figures are disappointing overall. Despite record levels of vacancies and unprecedented demand, employment is unchanged on the figures reported last month while economic inactivity, the measure of those who have left the labour market entirely, appears to be rising.

“This weak performance is being driven in particular by fewer older people in the labour market, especially fewer older women, and more people out of work due to long-term ill health. With nearly as many vacancies as there are unemployed people, employers are facing the tightest labour market in at least fifty years, with labour shortages now holding back our recovery.

“As each month passes these issues appear to be getting worse, with the recovery clearly stalling on the eve of the Omicron outbreak. So as we start the new year we need a new ‘Plan for Jobs’ that will raise participation and tackle the recruitment crisis.”