Clouds on the horizon as the recovery continues

This article was originally written as the special feature in the July 2021 edition of Report on Jobs.

Over the last few months, we have witnessed more signs of economic recovery as more sectors of the economy began to reopen. Since the beginning of the year, the UK’s GDP has been rising month on month. In April, it was estimated to have grown by 2.3%, which was the fastest rate of growth since July 2020, as restrictions continued to ease.

Data from the REC’s latest JobsOutlook survey shows a continuous growth in optimism amongst British employers. In the three months to May, business confidence in the UK economy surged by 21 percentage points and at net: +11, the barometer was in positive territory for the first time since July 2018 (net: +6).  Moreover, employers’ confidence about making new hires and investing in their business (net: +29) was at the highest level since March 2016. Hiring intentions for permanent staff in the short term (in the next three months) and the medium term (in the next 4-12 months) both rose to net: +24.

This increase in confidence has translated to more jobs being created in the UK. According to the latest REC Jobs Recovery Tracker there were 1.55 million active job adverts in the UK in the week of 21-27 June. In the same week, there were 192,000 new job postings signalling that employers’ demand remains buoyant and at a level higher than before the onset of the first national lockdown in March 2020.

The ONS Vacancies and Jobs in the UK data provides further evidence of this. It indicates that the number of job vacancies in the three months to May was only 27,000 below the pre-pandemic level of January-March 2020. The job creation boom we have been seeing in Q2 2021 has translated into a higher number of payrolled employees (although this is still over 500,000 lower than in early 2020) and lower number of workers on furlough.

However, there might be more challenges in the remainder of 2021. Both the Bank of England (BoE) and the Office for Budget Responsibility project that we are yet to experience the peak of unemployment – that will probably come later in the year as the Job Retention Scheme (JRS) comes to an end. Moreover, the latest Consumer Price Inflation (CPI) measures indicate that inflation is already over the BoE’s 2% projection.

And although at the time of writing, more than 30 million UK adults have received their second COVID vaccine, there are still growing concerns over the spread of the Delta variant. This of course led to the government decision to delay the final stage of unlocking for four weeks earlier in June. Alongside these lingering uncertainties over the pandemic, we have also experienced a serious shortage of workers, affecting almost every sector across the economy. Both of these factors have the potential to slow the UK’s recovery.

Annually recruitment businesses support over 300,000 people to transfer into a new permanent role, reducing unemployment and playing a key role in the social mobility ecosystem. That expertise will be needed now more than ever – it is in businesses’ best interest to utilise the specialised knowledge and experience that recruiters bring in these unprecedented times.