Daily briefing: Will the ping-demic scupper the UK’s jobs recovery?
The UK economy is “bouncing back”, Rishi Sunak, the Chancellor, said today after a raft of positive data from the Office for National Statistics (ONS) signalled a tentative recovery for the labour market.
According to the latest figures, unemployment dipped by 0.2 points to 4.8 per cent in the quarter to May, with an increase in both employment and the number of hours worked.
The number of people on payroll increased by 356,0000 in June compared to the previous month. Encouragingly, there was a sharp increase in both the food and accommodation sectors as restrictions on indoor hospitality were lifted and the Euros packed out pubs.
But the headline figure from the latest ONS data is the skyrocketing of job vacancies to above pre-pandemic levels.
According to the ONS, there were 862,000 jobs on offer between April and June – 77,500 more than the first three months of 2020. All but one industry saw increases in the number of vacancies, with arts, entertainment and recreation vacancies up 330.4 per cent.
On paper, the numbers look good. Unemployment is falling, more people are on payrolls and there is an abundance of job vacancies – all of which led the Chancellor to declare that he is looking forward to “seeing more people back at work” as the economy continues to rebound.
Not so fast, Rishi. Difficulties recruiting new staff, the end of furlough and Covid app chaos threaten to derail this hard-won progress before most people have even had a chance to get back into the office.
A survey of recruitment companies by accountancy firm, KPMG, and the Recruitment and Employment Confederation found a number of factors contributing to problems in hiring workers, including Brexit, pandemic-related uncertainty and the furlough scheme.
Gerwyn Davies, from the Chartered Institute of Personnel and Development, told the BBC that “a perfect storm” was playing out in the hospitality industry in particular, with demand for labour occurring alongside a sharp fall in the stock of EU workers.
And the problem isn’t going away any time soon. Responding to the latest ONS figures, Suren Thiru of the British Chamber of Commerce, said: “The recruitment difficulties faced by firms go well beyond temporary bottlenecks and with many facing an increasing skills gap, staff shortages may drag on any recovery.”
The apparent strength of the UK jobs market could also come crashing down when the furlough scheme is phased out in September. The latest available data shows that 2.4 million jobs were still supported by the scheme at the end of May.
Then there is the so-called “ping-demic”, with a record 520,000 people in England told to self-isolate by NHS Covid app in the week to 7 July.
Under the current rules, app users who are “pinged” after coming into contact with someone who has tested positive are not obliged to stay at home. They are kept anonymous through the app, meaning authorities are unable to track them down if they have been told to quarantine.
Essential services, such as the NHS and police, are reporting high numbers of staff off sick or isolating. According to The Times, even Conservative MPs are said to be disabling their apps and going into self-imposed quarantine before their holidays to avoid being told to isolate.
Yet the technology is creating chaos for the establishments sticking with the guidance. In an extreme example, 700 workers at Nissan’s Sunderland plant are reportedly self-isolating after entire teams were sent home.
Robert Jenrick, the communities and local government minister, said he was concerned about how the app is working and insisted the government is working on plans to ensure the app provides a “proportionate response” to the pandemic.
But with business groups warning that some companies are missing up to 20 per cent of staff who have been “pinged” by the app, Jenrick and his fellow ministers will have to work fast if they want to save the summer season from the looming staffing crisis.