Payroll returns to pre-Covid levels

According to statistics and government estimates, employers are struggling to fill job positions despite widespread labour shortages after the lockdown helped to restore pre-pandemic levels of staff on firm payrolls in August. 

In August, the Office for National Statistics reported a 241,000 increase in payroll staff to the total of 29.1 million, bringing employment in all regions of the UK back to pre-Covid levels except in London, Scotland, and south-east England. 

It comes as the number of job vacancies in the UK skyrocketed to more than 1 million in August for the first time since official records began in 2001, up 35% in three months across all sectors of the economy.

The highest increase was in accommodation and food services - the sector that includes hotels, pubs, and restaurants – with a 75% increase over the past three months, reflecting the difficulty finding personnel after shutdown for a wide range of businesses across Britain, according to the ONS.

Business leaders have warned that a lack of personnel and raw materials will hinder Britain from recovery from the pandemic, with lobby groups pressing for looser post-Brexit immigration laws to allow companies to hire more EU staff. 

During the pandemic, the number of EU staff working in the UK decreased as many staff members returned home, while persistent concerns about Covid, pandemic limitations, and post-Brexit migration laws hindered their return.

Despite an increase in the number of payrolled staff in August, employment in the UK remained below pre-Covid levels in official data gathered in the three months to July, according to the ONS. 

Unemployment was predicted to be at 4.6%, which is down by 0.3 percentage points in comparison to the previous quarter but still 0.6 percentage points more than it had been before the pandemic. Employment, which counts the percentage of persons aged 16 to 64 who are employed, rose steadily to 75.2% in the three months ending in July, but it is still 1.3 percentage points below pre-Covid levels. 

Since the official headline rates are based on surveys rather than corporate filings and cover a three-month period, they differ from the HMRC payroll figures. The HMRC data do not include self-employment, and some people with multiple jobs may be counted twice. 

According to the most recent figures released by HMRC last week, around 1.6 million staff members were still furloughed at the end of July, with the biggest numbers being in sectors of the industry where pandemic restrictions are the strictest.

Some experts believe the economy is well prepared for the termination of furlough, with record job openings potentially preventing a dramatic increase in unemployment. 

Grant Fitzner, the ONS's chief economist, stated that the government data from the Insolvency Service indicated that there was little evidence to suggest that when the programme ended, there would be a sharp increase in redundancies. 

“I wouldn’t say there won’t be some people losing jobs, but it’s safe to say ‘so far so good’,” he stated.

Contrastingly, others warned that mismatches between locations where staff are losing jobs and those where job openings are at an all-time high will generate problems. When the furlough ends and businesses struggle to attract staff, Yael Selfin, the chief economist of KPMG UK, predicted that there will be "more pain to come."

“While the pressure should ease as more people look to return to work and the furlough scheme ends, the UK labour market is set to remain choppy with vacancies taking time to fill due to skills shortages and reduced availability of overseas workers,” she said.

The chancellor, Rishi Sunak, said the latest numbers indicated the government's job-creation strategy was working, with unemployment dropping for the seventh month in a row. “As we work to recover from the pandemic, we will continue to focus on providing opportunities and supporting people's jobs,” he said.

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