Lancashire Times
Weekend Edition
Andrew Palmer
Group Editor
8:04 AM 14th September 2021

ONS Data Reveal Firms Facing Acute Hiring Crisis And Skills Mismatch

Image by Gerd Altmann
Image by Gerd Altmann
UK businesses and universities are today voicing serious concerns that we are facing a skills mismatch which is standing in the way of the nation’s recovery. This comes as new Office for National Statistics (ONS) statistics released this morning show the number of vacancies has risen above one million for the first time ever.

Dr Joe Marshall, Chief Executive of NCUB said: “While today’s labour market statistics are largely cause for optimism, policymakers must not become complacent about the recovery. As was the case last month, today’s statistics show a disproportionately high number of vacancies, alongside large numbers of people still furloughed and unemployed. There are worrying signs that employers across a multitude of sectors are currently facing difficulty in hiring. Businesses and higher education providers are therefore voicing serious concerns that we are facing a skills mismatch.”

“The furlough scheme has played a critical part in keeping people in jobs, and as it draws to an end, we should be ready to cope with a fallout. We know that young people, in particular, have been most affected by lengthy periods of unemployment. To help cope with this, we are urging the Government to restore a national labour market intelligence body, to replace the now-dissolved UK Commission for Employment and Skills.

"This body will be vital in order for businesses, universities and the Government alike, to better understand the labour market needs. It will allow universities to produce the highly-skilled, adaptable workforce businesses need, to help the nation’s post-pandemic recovery.”

Matthew Percival
Matthew Percival
Matthew Percival, CBI Director of People & Skills, said:
“As businesses recouped months of lost trade over the summer, the labour market showed positive signs of recovery too as employment and vacancy figures rose.

“However, ongoing supply and labour shortages are impeding further growth. Whilst firms accept a quick-fix overnight isn’t possible there are temporary and immediate measures the government must take to ease some of these pressures.

“In the longer-term, this means increasing investment in reskilling, automation and improved pay and conditions. But these steps take time to have impact, so we need a functional Shortage Occupation List too so that firms can temporarily fill the most significant vacancies.

“Government needs to immediately begin a review of shortages and accept the Migration Advisory Committee’s recommendations from last year to add extra jobs to the list”.
Also commenting on the ONS figures, TUC General Secretary Frances O’Grady said: "While it’s good news that more people are back in work, many working families are facing an uncertain autumn with the end of the furlough scheme – still supporting 1.6 million jobs – and a £20 cut to the weekly budgets of two million low-paid workers.

“The chancellor needs a plan to support jobs and family incomes. That means stopping the universal credit cut and extending the furlough scheme in hard hit sectors for as long as is needed to protect jobs and livelihoods.”

Kitty Ussher
Kitty Ussher
For the Institute of Directors, Kitty Ussher, Chief Economist, commented: "The economy is now well-prepared for the end of furlough, with unemployment demonstrating a clear downward trend and the highest level of vacancies in the economy since records began.

“In fact, with 44% of IoD members reporting staff shortages, across all skill levels, the challenge for government is to put its money where its mouth is and demonstrate in practice how we can fill vacancies by investing in our domestic workforce in a post-Brexit world.

“Today’s data shows there may be a particular opportunity to use flexible working to increase employment rates among people who want to work remotely: inactivity rates due to ‘looking after family or home’ have fallen sharply since the pandemic hit.

“The government now needs urgently to roll out and ramp up lifelong opportunities to retrain, including widening the scope of training provided through the apprenticeship levy.”
BCC's Head of Economics, Suren  Thiru, said:

“The jobs market has continued its summer revival as demand for workers has surged following the easing of Covid restrictions.

“But record vacancies also highlight the acute hiring crisis faced by many firms. With Brexit and Covid driving a more deep-seated decline in labour supply, the end of furlough is unlikely to be a silver bullet to the ongoing shortages.

“These recruitment difficulties are likely to dampen the recovery by limiting firms’ ability to fulfil orders and meet customer demand.

“Although the peak in unemployment will be lower than previous downturns, with rising cost pressures and an increasingly onerous tax burden likely to stifle firms' recruitment intentions, a notable rise in job losses as furlough ends remains probable.

“Consequently, we expect the UK’s unemployment rate to rise to a peak of 5.1% by early 2022 - equivalent to another 174,000 people out of work.

“Whether furloughed workers are returning to the workplace or the wider labour market after the scheme ends, it is vital that employers and the government provide the support and training they need to be re-engaged and productive.

“Expanding the Shortage Occupation List will also help businesses access the skills they need when they can’t recruit locally.”

Professor Len Shackleton, Editorial and Research Fellow at free market think tank the Institute of Economic Affairs, said:

"Today’s labour market figures look broadly positive, with the employment rate up, the unemployment rate down and total employment getting back close to pre-Covid levels.

"However, there is still the prospect of a sharp rise in unemployment when the Coronavirus Job Retention Scheme unwinds at the end of this month.

"The data also show continuing weaknesses in London and in particular in hospitality and the arts, where many young people have traditionally been employed.

"While the number of young people in work has risen again, it is still below the levels in the early part of last year. Self-employment, too, is still well beneath the pre-pandemic figure.

"Vacancies are at record levels, indicating strong demand in the labour market, but also a mismatch between job seekers and the types of work available.

"This reflects the changing structure of the labour market as we move into the ‘new normal’, with the continuing weakness of the high street and the jobs which have traditionally clustered around office employment, while opportunities surge in logistics, heavy goods vehicle driving and IT.

"Employers report difficulties with finding suitably trained and experienced applicants, one factor in which is the continuing fall in the numbers of EU nationals in the workforce.

"So although the UK labour market is in a much better place than seemed possible in the middle of last year, complacency would be the wrong response to today’s figures."