Week 25, 2017: Vacancies v.s. Employment Rate

 

Summary: This chart shows that the overall employment rate has been tracked by the number of available jobs until the financial crash. Following the financial crash the number of vacancies dropped from 704,000 in Q1 2008 to 432 thousand in Q2 2009, and took until the end of 2014 to recover to the pre-crisis level. The employment rate however took longer to reach its recession low point, falling from 73% in Q1 2008 to 70.1% in Q3 2011 although it recovered more swiftly to 73% in Q3 2014. Overall the employment rate has risen dramatically since 2012, although some of this rise is attributable to ongoing changes in the state pension age for women, which has caused fewer women to retire between the ages of 60 and 65. For the latest time period shown, the employment rate was 74.8%, the joint highest since comparable records began in 1971. 

What does the chart show? The chart shows the overall employment rate for adults of both genders between 16-64 years of age in percentage form measured against right hand axis. Measured against the left hand axis is the estimated real number of vacancies available in the UK job market in thousands, which is defined as roles for which employers are actively recruiting outside their organisation. The number of vacancies however does exclude agriculture, fishing and forestry sectors. Both data sets are seasonally adjusted.  

Why is the chart interesting? According to many industry bodies, a crucial post-Brexit challenge will be shortages in both skilled and unskilled labour, with a recent survey of over 1,000 employers by the Chartered Institute for Personnel and Development finding that employers were already reporting labour and skills shortages in a range of sectors including manufacturing, healthcare and hospitality. Indeed the surge in vacancies shown in the above chart does not include vacancies in agriculture, an industry with a  particularly high proportion of foreign and EU workers. The agriculture industry in the UK requires c.80 thousand seasonal workers and although industry labour providers reported that 100% of demand was met in Q1 2016, by the third quarter of 2016 47% of providers were reporting shortages. As many commentators have warned the UK may see food price inflation as a result of both these labour shortages and the potential increase in import costs following Brexit. With so many vacancies on offer there may also be an uptick in individuals working for multiple employers. One in four employers polled by the CIPD had reported evidence from their workforce of EU nationals considering leaving the UK as a result of the referendum, specifically that 43% of education employers and 49% of healthcare bosses think that EU workers are considering leaving.