Record no of people starting new jobs has failed to plug labour gap, says IES
This morning’s ONS Labour Market Statistics show that record numbers of people started new jobs between July and September this year, as Covid restrictions fully eased and furlough started to unwind.
In all 1.2 million people moved into work from being out of work (including nearly two fifths of all of those who were unemployed in the spring – another record), while 980 thousand people changed jobs.
Overall, this means that 2.2 million people started a new job between July and September – or 7% of all of those in work. In data going back to 2001, we have never seen a figure higher than 6.5%.
However despite these record movements into work, the number of vacancies has continued to rise (now reaching 1.2 million) and the number of unemployed people per vacancy has fallen even further, to just 1.3 people.
This is the key measure used in assessing the balance between labour demand and labour supply, and is now at comfortably its lowest since at least 1971. At the height of the crisis from April to June 2020, there were 4.1 unemployed people per vacancy.
The says the Institute for Employment Studies (IES), says their analysis suggests that this recruitment crisis is being driven by huge falls in labour market participation, mainly explained by more older people leaving work and fewer younger people entering from education, and that lower migration explained between a quarter and a third of the falls.
Overall they estimate that there is a “participation gap” of 950 thousand, between the number of people in the labour market now and what would have been expected based on pre-crisis trends. Just over half a million of this is explained by older people, and particularly older women (300 thousand).
Commenting on the figures, IES Director Tony Wilson said: “We’ve never seen jobs being filled at a faster rate than now, with three quarters of a million people starting a new job every month since Covid restrictions were eased.
“Yet despite this we’re seeing labour shortages across all parts of the economy and a tighter jobs market than at any time in at least fifty years. All told, we’ve nearly a million workers now missing from the labour market, and their absence is now holding back our recovery and adding to inflation. There’s little sign in today’s data that these problems are being driven by furlough or even Brexit.
“Instead they’re mainly being caused by older people who lost their jobs not going back to work as well as by more young people staying in education. These problems aren’t going to fix themselves in the near future, and we’re still doing nowhere near enough to help get people back into work, particularly for older workers, disabled people and parents.”