The UK Labour Market Puzzle

The last 18 months has seen huge disruption to the labour market across the country, as well as seismic shifts both to working practices and general living. For example, the number of people in work, the number of job vacancies, and employer demand all fell dramatically, particularly during the first Lockdown, whilst at the same time many workers switched to working from home, businesses were forced to adapt to new ways of working, and changes to lifestyle saw a big shift to online retail.

In recent months, however, we’ve seen a swift reversal of some of these phenomena, with employment being resurgent, and unemployment falling faster than anticipated. The story of employer demand has been particularly stark, with levels now significantly higher across most of the country than they were before March 2020. Given that many people had lost their jobs, and many had been on Furlough, it was widely anticipated that these positions would be filled fairly quickly. However, what we’ve actually seen is that whilst employer demand is high, and there is in theory a ready workforce, these positions are not being filled.

Although the problem is perhaps most obviously seen in Hospitality, it extends well beyond this sector. An article in the New York Times in September put it like this:

“Job vacancies in Britain are about 20% higher than their pre-pandemic levels, and the need for workers has gripped nearly every occupation, including computer programmers, health care assistants and farmworkers. Yet Britain also has nearly a quarter of a million more people unemployed and looking for work than before the pandemic.

The labor [sic] market, in short, is in a logjam: Employers have positions they need to fill, and plenty of people are looking for work, but the empty positions do not match what people are prepared for or want to do.”

The problem has been put down to a combination of the effects of the upheaval due to Covid-19, as well as the departure of several hundred thousand EU workers after Brexit. However, as a report in Bloomberg noted, the problem is not peculiar to Britain, but is being seen across many countries:

“A survey of nearly 45,000 employers across 43 countries showed 69 per cent of employers reported difficulty filling roles, a 15-year high, according to employment-services provider Manpower Group Inc. At the same time, 15 countries – focused in Europe and North America – reported their highest hiring intentions since the survey began in 1962.”

This odd “logjam” scenario is something of a labour market puzzle. Employer demand is higher than we might have expected, given the huge level of disruption that has taken place, yet labour supply is not meeting that demand, even though in theory the numbers of people looking for work should mean that many of these roles are filled.

In a new two-part report, Emsi Burning Glass and GetMyFirstJob have teamed up to try to make sense of this puzzle. Using Emsi Burning Glass’s labour market data, we are able to shed some light on the current state of play regarding employer demand. Using GetMyFirstJob’s data on new entrants into the labour market, we can shed some light on how the level of supply has been affected. By putting these datasets together, we can get a much better sense of how demand and supply are meeting or missing one another.

In the first part, we look at both the demand and supply sides of the puzzle to find out what has been happening. In Part 2, which will be released in the next few weeks, we’ll be shining a spotlight on some key sectors, and asking how education and training providers can respond to this unique and very puzzling situation.

You can download a free copy of the report here or by clicking on the image above. You can also contact Emsi Burning Glass here.