Unemployment Might Be Low – But Vacancies Are Soaring

Sep 21, 2022

‘Where are all the workers?’

At a time when unemployment has just hit a 48-year low, this might seem like an odd question to be asking. Especially as the jobs ‘miracle’ was something touted by Boris Johnson’s government that made it a great time to be a UK resident in a trade, or a teenager pulling a pint. It’s all good news, right?

Well, not really. Because the truth hidden under the nice low number is that more and more people are dropping out of the labour market altogether. There are still as many posts vacant as people looking for work, despite employers having to scale back massively during the challenging economy. The new low in unemployment isn’t because more 16-65-year-olds are in work – it’s because more people are not, or cannot, seek work. And if you look closely at the problem, you will see there are 2 key reasons businesses are still struggling to fill vacancies.

Post-Covid Problems

There is no denying that Covid-19 has had a huge impact on this country, and the world in general. That includes the workforce. The rate of economic activity has hit a six-year high, and this is largely because there are hundreds of thousands of 50 and 60-year-olds suffering from long-term illnesses. So many, in fact, that the Office of National Statistics have declared it a record number.

Why is that? Well, because the NHS backlog has been going on so long in such a severe state, its effects are having a massive effect on the labour force. People who should have seen doctors during the pandemic avoided it due to the NHS strain, and are now much sicker than they should be. Those waiting for operations that have been delayed again and again are losing hope. People who can afford it are going private in droves, while those struggling for money are left waiting for longer and longer. We are left with a queue for national healthcare that would put the queue for the Queen’s coffin to shame. All of these people, sick enough that they can no longer work.

On top of that, we have long Covid. While government policymakers seem to hope long Covid will just go away, over 1.5 million people are suffering with it. That’s between 10-20% of people who had Covid. And if you’re one of the ones struggling with long Covid, you know how difficult it is. While it can be mild, it’s a crippling condition that can render you completely unable to work.

This, if nothing else, should have policymakers worried. Because while younger people will return to work after an illness, 50+-year-olds rarely do once they’ve retired. So what we now have is thousands of people over the age of 50 leaving the workforce completely because the healthcare system has failed them. These people are not ‘unemployed’ in the traditional sense, and so the unemployment numbers being reported aren’t really an accurate reflection of the spare labour capacity in the market.

The Brexit Effect

Of course, that’s not the only reason the vacancy rate is high but unemployment is low. Brexit has had a big impact too, causing what can only be described as a mass exodus of European Nationals. This means that the industries that were heavily reliant on EU labour are left with an enormous hole in their workforce, and they are finding it hard to adjust. This is particularly true in the low-wage sectors. The National Farmers Union has complained about fruit and vegetables being left to rot in fields, and other sectors like social care and hospitality are all feeling the strain. Even in industries like construction, which allows immigration under a skilled work visa, there has been low uptake.

The thing is, Brexit cracked down on visas for low-wage sectors. In a bid to prevent the undercutting of wages and improve productivity, the government may have gone too far, creating a hole in the economy that cannot be filled. And even though the number of non-EU arrivals between 2019 and 2021 has offset the workers who have been lost, those arriving are in higher skilled jobs, and so aren’t filling that employment gap left by the EU worker exodus.

 

Up until the pandemic struck, Britain had been doing well at encouraging people into work when able. Universal credit and the benefits system were incentivising people to work, and there were systems in place to get people off long-term sickness benefits and back into work, where possible. When you look at the unemployment numbers on the surface, you might think the systems are still working, and that we should even be patting ourselves on the back for a job well done. But don’t be fooled – there is a lot of work still to be done, and recruitment support is essential during the recovery.

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