Job vacancies in Britain climbed to a record high at the start of the summer as businesses competed with each other to fill positions after the government lifted pandemic restrictions.
From May to July, businesses sought to fill 953,000 vacancies, up 44 percent from three months earlier and well above prepandemic levels, according to data from the Office for National Statistics published on Tuesday.
Vacancies were highest for health care workers, followed by positions in the wholesale and retail industry and the accommodation and food services industry, such as hotels and restaurants, the statistics office said. In recent months, many businesses in these industries have reported staff shortages and in the case of hospitality, some are restricting their opening hours to ease the burden on existing staff members even as consumer demand is high. Some businesses are raising pay to lure new employees as the pool of people out of work shrinks.
Pay excluding bonuses jumped 7.4 percent in the second quarter from the year before. But even once certain quirks from the pandemic are stripped away — such as the effect of fewer low-paid employees in the work force a year ago, when much of the economy was in lockdown — the increase in pay was 3.5 percent to 4.9 percent, the statistics office estimated. It’s much higher than the average annual increase of the previous decade, which was about 2 percent.
“Rising wage pressures fit with the broader story of rising inflation across the economy,” Kallum Pickering, an economist at Berenberg, wrote in a note. This strengthens the case for the Bank of England to raise interest rates next year, he added.
Overall, the British labor market is recovering strongly from the pandemic. The number of people on payrolls rose by 182,000 in July, up 0.6 percent from June. Compared with February 2020, the number of payrolled employees is down by 201,000. At its worst, in November, there were nearly 969,000 fewer employees than before the pandemic.
In the second quarter, the unemployment rate slipped to 4.7 percent from 4.9 percent in the previous quarter. There was a record flow of about 300,000 people from unemployment into employment. There was also a decrease in the economic inactivity rate, as more people were classified as unemployed because they have resumed hunting for a job.
By the end of the second quarter, about two million people were still on furlough in Britain, but that program will end next month. Even as vacancies remain high, policymakers and economists are watching closely to see if there will be a notable rise in the unemployment rate after the furlough program ends or if those workers are able to find jobs.
The Bank of England is not forecasting another increase in the unemployment rate this year and but expects it to be about 4.25 percent in 2023. It was at 3.8 percent before the pandemic.
“The challenge of avoiding a steep rise in unemployment has been replaced by that of ensuring a flow of labor into jobs,” Andrew Bailey, the governor of the central bank, said earlier this month. “This is a crucial challenge.”