UK job vacancies hit new record high

Job vacancies in the UK have hit yet another record high as the unemployment rate fell to below pre-pandemic levels for the first time, official figures showed on Tuesday.

David Sapsted

15 March 2022

Data from the Office for National Statistics (ONS) recorded more than 1.3 million vacancies in the three months to the beginning of last month, mainly as a result of older people leaving the workforce.Meanwhile, the jobless rate fell from 4.1% to 3.9% over the quarter while the employment rate increased 0.1 percentage point to 75.6%.There were 1.34 million registered as unemployed in the three months to January, below the 1.36 million recorded in December-February quarter two years ago, immediately before the pandemic arrived.

ONS: Record number of job vacancies

Grant Fitzner, chief economist at the ONS, said, “The labour market continues to recover from the effects of the pandemic, with the number of unemployed people falling below its pre-pandemic level for the first time and another strong rise in employees on payroll in February.“However, the number of people out of work and not looking for a job rose again, meaning total employment remained well below its pre-pandemic level.“We have seen yet another record number of job vacancies, and with the redundancy rate falling to a new record low, demand for workers remains strong.”

UK government focused on helping people back into work

Minister for Employment Mims Davies said the government remained focused on helping people back into work with the growth in employment "providing a stable foundation as new global challenges emerge".She added, “We are connecting thousands of job-ready claimants to live opportunities, giving them a platform to progress and pursue a career. To achieve this, we are working with a wide range of sectors to create and maintain a workforce that is skilled, productive, reliable and resilient.”

CBI: pay not keeping pace with inflation and long-term sickness absence remain key problems

Matthew Percival, director for people and skills policy at the Confederation of British Industry (CBI), said the good news was that the labour market was seeing rising employment amid record number of job vacancies."Yet," he added, "pay is not keeping pace with inflation and long-term sickness absence continues to drive rising inactivity. Supporting employee health so that people are able to return to work requires sustained effort from employers and government."

BCC: recruitment difficulties may persistently drag on economic output

Suren Thiru, head of economics at the British Chambers of Commerce, said the figures showed demand for workers remained robust despite growing economic headwinds.“Record vacancies highlights chronic imbalances in the UK labour market with demand for workers outpacing supply. With rising economic inactivity indicating a deep-seated decline in worker participation, particularly among older people, recruitment difficulties may persistently drag on economic output," he said.“While demand for labour is currently strong, the damage to firms’ finances from rising cost pressures, a weakening economic outlook and next month’s national insurance rise may significantly squeeze recruitment intentions and pay growth in the near term.“Although the latest jobs data provide no impediment to raising interest rates, concern over the impact of Russia’s invasion of Ukraine may give the Bank of England pause for thought over further monetary tightening."

Will the Bank of England's Monetary Policy Committee raise interest rates?

However, many economists believe the Bank of England's Monetary Policy Committee (MPC) is still likely to raise interest rates from 0.5 to 0.75% when it meets on Thursday.Paul Dales, an economist at Capital Economics, said, "The further fall in the unemployment rate to within a whisker of the pre-pandemic rate will only encourage the Bank of England to raise interest rates on Thursday, despite the coming extra hit to households’ real incomes from the war in Ukraine.
"What’s more, we think a low unemployment rate and high wage growth will prompt the Bank to raise rates to 2% next year."Martin Beck, chief economic adviser to the EY ITEM Club, commented, “The MPC’s worry will be that a tight jobs market risks inflationary second-round effects, as workers seek to offset cost of living pressures by asking for higher wages.
"This means it’s now even likelier that the committee will raise interest rates on Thursday."