Economics – Labour demand strengthening as “normality returns”

Date : 20 July 2021

ONS data on the UK labour market gives further evidence of an economy “bouncing-back” from the pressures of COVID-19.

Overall unemployment was stable at 4.8% in April 2021. For the vulnerable 18-24 year-old group, unemployment peaked at 13.8% in November 2020 but has declined since then, to 11.6% in April 2021.

Pay is rising – average total pay was up 5.7% annually in April 2021, but this may be partly due to compositional effects (ie: changes in the sample) and base effects (ie: low comparables in Spring 2020).

Accounting of these factors, plus rising inflation, it is likely that “real” wages were up by around 2.7% year-on-year in April 2021. This is still quite strong and may help to account for resurgent shopper confidence.

The rate of redundancies is now back at the pre-COVID level and the number of unfilled vacancies continues to rise.

Vacancies in accommodation / foodservice and arts / entertainment / recreation activities are increasing rapidly, suggesting that these sectors – hit hard by COVID-19 – are now retuning to “normal”.

This is, in some ways, encouraging, but IGD contacts suggest that recovery of foodservice in particular is being hampered by a lack of labour.

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