Vacancies continuing to rise after hiring ‘bounceback’, says IES

But report warns high unemployment and economic inactivity could risk increases in inflation and social exclusion in the long term if not addressed

Vacancies hit their highest level ever recorded last month, analysis of official data has found, with a sustained recovery in hiring being driven by a ‘bounceback’ from previously shut down sectors.

Analysis of data from the Office for National Statistics by the Institute for Employment Studies (IES) estimated there were a record 962,000 vacancies in June this year.

The report noted that 570,000 payrolled jobs were added in the last two months between June and April, nearly as many as the number lost in April and May 2020 (665,000), which the IES suggested was driven by the lifting of restrictions on industries forced to close because of coronavirus.

However, the report was concerned by the continued increase in long-term unemployment, which was up by more than two-thirds in the last year (70 per cent or 560,000), from May 2020 to May 2021, which the IES said was the highest rate of growth in long-term unemployment since the data series was started in 1992.

Economic inactivity also remained high and, for the first time since October 2020, there were more people off work because of unemployment than people who were off work and fully furloughed.

The report warned that if the high vacancies alongside long-term unemployment and economic inactivity were not addressed, there may be growing mismatches in the labour market which could risk sustained higher unemployment, inflation and social exclusion.

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“We need to be doing far better at helping unemployed people to fill [job vacancies],” warned Tony Wilson, director of the IES.

“If we don’t, then we’re risking a two-speed recovery with those who lost their jobs last year being left behind,” he added.

Gerwyn Davies, senior policy adviser at the CIPD, said the rising number of vacancies was potentially great news for jobseekers as it will encourage employers to make full use of available UK workers. 

But, he said: “This potential is being impeded by some employers’ reliance on a relatively narrow range of recruitment channels, many of which do not reach out to the local community.”

Davies added that the possibilities of training, promotion and better job quality need to go hand-in-hand with raising pay if employers are to succeed in recruiting and retaining workers from a broader range of labour pools.

The IES called for further investment into Jobcentre Plus services, the new Restart programme and the Kickstart scheme.

It also advised that there needs to be a greater focus on extending and improving support for people who are further from work, specifically for those who are out of work due to ill-health, caring or other reasons.

For employers, the report said that they will need to ensure that they are designing and recruiting into jobs in a way that will support groups such as students, carers and older workers to take them up.