Call for urgent action to plug labour gap

As ONS statistics show record vacancies, an expert has called for more focus on support to get parents, older workers and the disabled back to work.

woman working at home on the computer


The Chancellor must take urgent action at the upcoming spending review to improve support for older people, parents and disabled people, according to an employment expert, as new statistics show a labour gap of nearly a million people since the pandemic.

The Institute for Employment Studies estimates that the UK now has a “labour gap” of 900 thousand between the number of people in the labour market now and what would have been expected based on pre-crisis trends.  It says this is being driven by large falls in participation for older people and young people, alongside continued wide employment gaps for disabled people and those with health conditions. It also highlights the importance of helping people with caring responsibilities to ensure employers have a larger talent pool to draw from.

Latest figures from the Office for National Statistics, out today and covering June to August, show employment was up 0.5 percentage points on the previous quarter, to 75.3%. and the unemployment rate decreased by 0.4 percentage points, to 4.5%. The economic inactivity rate is down 0.2 percentage points on the previous quarter, to 21.1%., returning to pre-coronavirus (COVID-19) pandemic (February 2020) levels.

The number of job vacancies in July to September 2021 was at a record high of 1,102,000, an increase of 318,000 from its pre-pandemic (January to March 2020) level. This was the second consecutive month that the three-month average has risen over one million, said the ONS. All industry sectors were above or equal to their January to March 2020 pre-pandemic levels in July to September 2021, with Accommodation and food service activities increasing the most, by nearly 50,000 (59%).

Growth in average total pay (including bonuses) was 7.2% and regular pay (excluding bonuses) was 6% among employees for the three months June to August 2021. However, the figures are being affected by factors such as furlough and a fall in lower paid employee jobs during the pandemic.

IES Director Tony Wilson said the figures showed a need for urgent action to get people back into the workforce and that pay rises alone would not be sufficient.

He said: “Today’s figures show that labour shortages are now affecting the whole economy, with fewer unemployed people per vacancy than at any time in at least forty years.  We estimate that there’s nearly a million fewer people in the labour market than on pre-crisis trends, with this being driven particularly by fewer older people in work and more young people in education.  These shortages are holding back our economic recovery, and won’t fix themselves by just exhorting firms to pay people more.

“Instead we need to do far better at helping some of the six million people who are outside the labour market because of ill health, caring or full-time study to get back into work.  For government, we need urgent action at the spending review this month to improve support for older workers, parents and disabled people in particular, where we’ve spent less on employment support in the last year than the furlough scheme costed in a single week.  And firms will need to do more too, particularly by improving how they advertise and recruit, but also in trying to meet people half way on job security, flexibility and workplace training and support.”

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