Charlie Ball's labour market update, brought to you by Prospects Luminate and Jisc Data and Analytics, includes a report by the ONS on the effects of COVID-19 on young workers and a new economic forecast by the NIESR
The latest round of the Office for National Statistics (ONS) fast response experimental statistics on the impact of COVID were released on 13 May.
- The proportion of the workforce of all UK businesses on furlough was 11%, a slight decrease from 13% in the previous wave.
- 26% of the workforce worked solely from home last week.
- In March 2021, a net 7% of 34,940 firms reported an increase in turnover compared with March 2020; this was driven by turnover estimates increasing in all major industries (services, production, construction, and agriculture).
- The proportion of UK online job adverts on 7 May 2021 was at 107% of its February 2020 average level, an increase of 4 percentage points compared with two weeks ago. This is the first time that there have been more online job adverts than the equivalent week of 2019.
- On 7 May 2021, UK online job adverts for 'catering and hospitality' were 103% of their February 2020 average volume, up 46 percentage points since 9 April 2021.
- Another notable increase was in 'transport / logistics / warehouse', which rose by 18 percentage points from a fortnight ago to 235% of its February 2020 average level on 7 May 2021. This category has seen a substantial rise since the start of the year, growing by 136 percentage points since 15 January 2021 and now exceeds both 2019 and 2020 levels in the latest week. It is thought that jobs within this sector are taking longer to fill and accumulating, which is contributing in-part to the higher overall vacancy numbers for this category.
UK gross domestic product (GDP) is estimated to have decreased by 1.5% in Quarter 1 2021
- There have been contractions in services and production output, however, construction output grew over the quarter.
- In output terms, school closures and a large fall in retail sales earlier in the quarter dragged down GDP growth.
- The level of GDP is now 8.7% below where it was before the pandemic at Quarter 4 2019.
There is also this interesting piece from the ONS on how they have been examining homeworking.
Young people were more likely than other age groups to be employed on zero-hours contracts in 2020.
Finally from the ONS this week is a deep dive into the effects of COVID on young workers.
- Young people's employment rate saw a large decline in 2020 compared with 2019, while their unemployment and economic inactivity rates increased.
- After an initial fall in young people in full-time education in the first few months of the pandemic, the proportion of young people in full-time education increased in the second half of 2020, reaching a new high of 46.8% in Quarter 3 2020.
- The number of young people employed in the accommodation and food services industry who moved to unemployment or economic inactivity increased by more than 50% in Quarter 2 (April to June) 2020 compared with Quarter 2 2019.
- Between Quarter 4 of 2019 and the same period in 2020, the proportions of young people employed across industries declined the most in accommodation and food service activities, arts, entertainment, and recreation and manufacturing. The proportions increased the most in public administration, wholesale and retail trade, and professional, scientific and technical activities industries.
- Young people who worked part-time moved from employment to economic inactivity at a faster rate than they moved to unemployment in 2020.
- Increasing unemployment and economic inactivity were associated with fewer vacancies in industries that mostly employed students, which were heavily affected by lockdown restrictions.
- Young people's labour mobility (job-to-job moves) declined more during the pandemic than for older age groups.
- Young people were least likely to work from home partly because their employment tended to be concentrated in industries that had fewer opportunities for home working.
- Young people were more likely than other age groups to be employed on zero-hours contracts in 2020.
The same effects have been seen in Ireland, as this report from ESRI, the Economic and Social Research Institute, shows.
- There were 112,000 fewer 15-34 year olds in paid work in the final quarter of 2020 than a year earlier, compared to 93,000 fewer workers aged 35+.
- Employment was 14% below its pre-pandemic level for those age 15-34 compared to just 6% below for those age 35+.
The REC's Jobs Recovery Tracker, in conjunction with EMSI, found that in the first week of May there were 181,000 new job adverts posted online.
- Easing of lockdown has translated into increased confidence in the economic outlook and more job adverts.
- Continued growth for roles in hospitality, as well as more adverts in other service industries.
- In the first week of May the occupation with the highest weekly increase in active job postings was teaching and other education professionals (up 22.1%).
- Recruiters are reporting an increasingly tight labour market in a number of sectors -particularly those that aren't currently listed on the Skilled Worker Occupation Shortage list. This has been predicted for some time but now appears to be an issue.
The CIPD/Adecco Labour Market Outlook has a similar story.
- The proportion of organisations planning to recruit in the three months to June 2021 has risen to 64% - the highest level since the February 2020 Labour Market Outlook.
- There has been a sharp increase in hiring intentions among the worst affected sectors during the pandemic. 66% of hospitality firms plan to recruit in the second quarter of 2021, up from 36% in the first quarter of 2021.
- The proportion of employers intending to make redundancies continues to fall. 12% expect to cut jobs during the next three months, down from 20% in the previous quarter. This is consistent across all three sectors of the economy.
- The difference between the proportion of employers expecting to add jobs and those planning to cut them, has risen sharply to +27 for the second quarter of 2021, compared with +11 in the first quarter of the year.
- The CIPD do counsel that this jobs surge will level off in time.
- There are concerns that pay rises, particularly for public sector workers, may not meet rises in cost of living.
And a survey of 15 of the UK's biggest hospitality employers, employing 103,500 workers between them, comes to similar conclusions.
Positive economic growth is expected to resume in all regions in 2022 Q2. The employment level in the aggregate economy is expected to recover by the end of 2023.
The National Institute of Economic and Social Research (NIESR) have issued some new economic forecasts.
- The forecast for economic growth in 2021 has been revised up to 5.7% from 3.4% in February. The immediate economic effects of the virus, which have been concentrated in the low-waged service sector, are expected to wane, while remaining negative consequences of Brexit will make themselves felt over the long-run and largely in sectors less affected by Covid-19.
- Employment is not expected to get back to pre-pandemic levels until the end of 2023.
- The third national lockdown has seen the adaptation of much of the economy to pandemic conditions, meaning that a smaller fall in first-quarter GDP than previously forecast provides a strong basis for the rest of the year. This is followed by the projected re-opening of the remaining affected sectors, thanks to the successful vaccination programme. The principal downside risk remains a resurgence of the Covid-19 virus, through new variants or the failure of vaccines, and the UK will not be physically or economically protected from a failure to control the virus globally.
- Thanks to the extension of furlough and other support measures to the autumn, NIESR now forecast unemployment to peak at 6.5% in the final quarter of this year.
- Income growth and a degree of forced savings under lockdown provide a strong basis for forecast consumption growth of 5.9% in 2021.
- CPI inflation to rise over the coming months, reaching 1.8% in the final quarter of 2021, before falling to 1.5% at the end of 2022 and settling just below its 2% target between 2023 and 2025. Bank Rate is not forecast to rise until 2023.
- The effects of Covid-19, together with Brexit, continue to exacerbate socio-economic disparities across the UK's nations and regions, including severe effects on the most vulnerable in society - especially in the devolved nations and the North of England.
- The third lockdown resulted in a fall of economic output as measured by Gross Value Added (GVA) in all parts of the UK. The total drop was 2.4% in 2021 Q1 compared with 2020 Q4, but GVA is still projected to remain 9% below the pre-Covid-19 level.
- The economy is estimated to recover by 2023 Q2 with the North, Wales and Northern Ireland still 2% below their 2019 Q4 level.
- As Covid-19 hit the economy, all nations and regions suffered a sharp decline in GVA by 2020 Q2. London and Northern Ireland suffered a particularly high fall, reaching up to 25% in comparison to the levels of 2019 Q4. After a short-term recovery over the second half of 2020, GVA in these regions plummeted by 10% compared with the last quarter of 2019 as Brexit hit in 2021 Q1.
- Following the Covid-19 lockdowns, overall employment levels continue to fall and are projected to reach a pandemic low in 2021 Q4 of 2.5% below 2019 Q4 levels.
- Positive growth is expected to resume in all regions in 2022 Q2. The employment level in the aggregate economy is expected to recover by the end of 2023.
- London is projected to do much better than the rest of the UK in terms of its employment levels. Northern Ireland, however, is behind the rest of the nations and regions not only by its output but also by the sharp short-term decrease in employment, expected to reach almost 5% below 2019 Q4 by 2021 Q4.
- Although employment in the economy as a whole is expected to reach pre-pandemic levels by 2023 Q4, the North West, the East Midlands and the South West are projected to remain below the 2019 Q4 level of employment by the end of 2025.
- This is levelled out by a strong recovery of the North East, Yorkshire and the Humber, as well as London. By 2025 Q4, employment in London is projected to be 7% above its 2019 Q4 level.
- As the higher and rising participation rate is not matched by job creation and vacancy fillings, the unemployment rate in London is projected to be the highest in the UK and to decrease slowly. Elsewhere, there is a lower rise in unemployment, but the pace of the recovery is almost equally slow.
The Law Society have surveyed their members, who are optimistic about the next few months.
- Business confidence is strong with 52% of firms predicting an improvement in firm's fees and 46% predicting an improvement in firm's profitability.
- Expenditure had increased for 29% of respondents, remained broadly the same for 57% of firms and decreased for 14% of firms.
- Only 4% of firms reported redundancies in the first quarter of 2021.
- Headcount of fee-earners had increased for 23% of firms, slightly ahead of the 15% of firms increasing their support staff headcount.
- Of firms with physical premises, 15% had reduced their office space and a further 10% anticipated a reduction in the next quarter.
- The number of new matters starts in conveyancing had increased 54% for firms working in this practice area.
- Commonly cited challenges for the next year were wider economic conditions (46%) and cashflow (39%), followed by succession planning (36%) and changing employee working arrangements (34%).
And the National Manufacturing Barometer for this quarter has just been published.
- Nearly two-thirds of firms are expecting to increase sales between now and October, with 58% indicating that they are planning to increase investment over the next six months. Out of nearly 300 firms questioned, 54% highlighted the need to recruit staff over the coming months, and the balance in the industry is strongly in favour of an increase in headcount.
- Manufacturing SMEs are recovering from the pandemic and 48% expect to return to, or exceed, their pre-COVID-19 position within three months. In total, 80% of businesses took advantage of the furlough, which is now being used 37% of respondents.
- The survey found also that new working practices are being implemented, with 42% of respondents planning to offer employees some level of remote working (up 28% on pre-pandemic levels).
- 46% report an increase in sales, compared to 31% in the previous barometer.
78% of managers report some apprehension from staff about a return to the workplace.
The Chartered Management Institute have released a survey of their members.
- Despite a growing appetite for hybrid ways of working, large numbers of staff are expected to return to the workplace when work from home guidelines are lifted on 21 June.
- 80% of managers are expecting on average 59% of their staff back in the workplace in June.
- However employees' views were not being fed into the decision-making process regarding the return to the workplace, with 50% of managers having had a formal consultation with staff.
- 78% of managers report some apprehension from staff about a return to the workplace. Social distancing at work (59%) and the use of public transport to commute to work (48%) were the biggest concerns. Commuting concerns were greatest for managers in London (79%).
- Homeworking, however, continues to present some challenges for both managers and their direct reports such as social isolation (71%), home place distractions (70%), negative impact on mental health/ wellbeing (66%), and work/life balance (60%).
The Centre for Cities have updated their High Street Recovery Tracker.
- Averaged across all city centres, customer spending now reaches 72% of its pre-pandemic levels - up 50 percentage points compared to the week before the economy reopened. With the exception of Scottish cities where restrictions were lifted later in the month, the impact of the reopening on 'physical' spend, whether in shops, pubs or restaurants is visible everywhere up and down the country.
- While small and medium-sized city centres are now approaching full recovery (more than 90% recovery on average), larger city centres are not there yet (72%. While Huddersfield, Basildon and Blackburn are the cities with the strongest recovery (each of them above 115% of pre-pandemic levels), London lags far behind and large cities like Manchester, Glasgow, Edinburgh, Newcastle and Birmingham are also in the bottom 10.
And two reports from Indeed this week, the first their usual update to 7th May.
- Job postings were 3.6% below the 1 February, 2020, pre-pandemic baseline, seasonally adjusted, as of 7 May, 2021.
- That was an improvement from -10.0% a fortnight ago and continues the period of rapid growth since the government's reopening roadmap was announced on 22 February.
- Food preparation and service jobs are now 4% above their pre-pandemic level, having been over -80% down when the roadmap was announced on 22 February.
- Sports, cleaning and sanitation, chemical engineering, retail, hospitality and tourism and loading and stocking have also seen solid gains over the past fortnight.
- Indeed also report hiring issues in the hospitality sector.
The second is this look at graduate jobs on Indeed. It presents a view slightly at odds with others on the graduate jobs market but is worth looking at.
- The share of graduate postings per million job listings on Indeed's UK website is down 24% from 2019.
- The share of internships has also fallen, down 41% from 2019 levels.
- Graduate jobs offering remote work increased during the pandemic, but the trend appears to be reversing.
- As of 10 May, searches for graduate jobs as a share of all searches on Indeed UK were 14% lower through the same date in 2019 and 24% below the same period in 2020.
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