Swindon & Wiltshire Business News

UK employee numbers surge above pre-pandemic level

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UK employee numbers have surged to above pre-pandemic levels, with employers adding a record 241,000 staff last month according to figures published today by the Office for National Statistics.

The news comes as the government prepares to end the furlough scheme on September 30. The scheme, which helped around a third of employees at its peak, was still supporting 700,000 employees last month.

The ONS said number of payroll employees now stood at 29.1 million, with the employment rate standing at 75.2 percent (up half of one percent) while the unemployment rate fell 0.3 percent to 4.6 percent.

The economic inactivity rate was down 0.3 percentage points on the previous quarter, to 21.1 percent, said the ONS.

Meanwhile, the number of job vacancies in June to August 2021 was 1,034,000, which is the first time vacancies have risen over 1 million since records began, and is now 249,000 above its pre-pandemic January to March 2020 level.

Growth in average total pay, including bonuses, was 8.3 percent and regular pay (excluding bonuses) was 6.8 percent among employees for the three months May to July 2021.

The ONS noted that temporary factors have inflated the increase in the headline growth rate.

While the figures sound like good news, the British Chambers of Commerce sounded a note of caution, warning of an acute hiring crisis.

"Record vacancies also highlight the acute hiring crisis faced by many firms," said BCC's head of economics, Suren Thiru.

"With Brexit and Covid driving a more deep-seated decline in labour supply, the end of furlough is unlikely to be a silver bullet to the ongoing shortages.

“These recruitment difficulties are likely to dampen the recovery by limiting firms’ ability to fulfil orders and meet customer demand.

“Although the peak in unemployment will be lower than previous downturns, with rising cost pressures and an increasingly onerous tax burden likely to stifle firms’ recruitment intentions, a notable rise in job losses as furlough ends remains probable.

“Consequently, we expect the UK’s unemployment rate to rise to a peak of 5.1 percent by early 2022 - equivalent to another 174,000 people out of work."

It was a view echoed by the Confederation of British Industry.

Matthew Percival, CBI director of people and skills, said: "Ongoing supply and labour shortages are impeding further growth. Whilst firms accept a quick-fix overnight isn’t possible there are temporary and immediate measures the government must take to ease some of these pressures.

“In the longer-term, this means increasing investment in re-skilling, automation and improved pay and conditions. But these steps take time to have impact, so we need a functional Shortage Occupation List too so that firms can temporarily fill the most significant vacancies.

“Government needs to immediately begin a review of shortages and accept the Migration Advisory Committee’s recommendations from last year to add extra jobs to the list."

And the Federation of Small Businesses said the statistics did not "reflect lived reality."

It warned that the number of sole traders has fallen more than 10 percent from 4.7 million in June 2019, before the pandemic hit, to around 4.2 million.

And it said 72 percent of employees on furlough belong to businesses with fewer than 50 employees.

FSB national chairman Mike Cherry said: “While these employment figures are encouraging on the face of it, they don’t reflect the lived reality for many small employers.

“Labour costs are rising, skills shortages are making it harder and harder to recruit, and several regions and sectors are struggling to find their feet.

“With the end of furlough only weeks away, policymakers cannot afford to be complacent. Seven in ten of the million plus people supported by the job retention scheme belong to businesses with fewer than 50 staff.

"It’s the smallest employers, and their teams, that will bear the brunt of furlough’s wind-down.

“What small businesses are looking for at this point is measures to facilitate the confidence and cashflow they need to retain and recruit as we head into the critical final quarter of the year. As such, last week’s announcement of NICs and dividend tax hikes came as a real blow."