September 7, 2022
After months of escalating labour shortages in the UK, summer’s red-hot jobs market is starting to feel an autumn chill: vacancies fell in July for the first time in over two years. Energy prices and inflation show no sign of stopping their surge, meaning cost of living concerns are top of mind for job seekers even as the labour market loosens slightly. That doesn’t mean employers can relax, however – the difficulties in hiring are unlikely to ease overnight, particularly in sectors like hospitality and healthcare.
Here are three trends we’ll be watching for when the Office of National Statistics (ONS) publishes its September labour market overview next Tuesday:
What Glassdoor and Fishbowl data shows:
Vacancy growth has been slowing for months, but healthcare and hospitality still have increasing numbers to fill.
With persistent supply chain instability, rising interest rates, and spiking energy bills eroding disposable income, employers are starting to slow down on hiring.
However, the labour shortage in healthcare shows no signs of slowing anytime soon; demand is unlikely to slow down even while the NHS and social care face ‘the worst staffing crisis in history’, with too few employees training to replace those already working. While hospitality is particularly vulnerable to energy price increases and cutbacks in consumer spending, job openings are stubbornly elevated due to the industry’s particularly wide gulf between labour demand and the number of potential employees available for work; even if demand cools, the sector will continue to confront hiring gaps in the near-term driven by lack of labour availability, particularly among EU citizens, who made up a relatively large share of workers prior to Brexit but can no longer work in hospitality jobs without visas.
After holding steady during most of the pandemic, the employment rate among pensioners has grown since the start of 2022 to its highest level on record. The trend is unlikely to reverse in the near-term as pensioners seek to combat the cost of living crisis eating away at their savings.
Though record levels of inflation will push next year’s state pension up more than 10 percent — reaching above £10,000 a year for the first time — the rise won’t kick in until next April. The bridge between now and next spring is going to be a particularly tight period for pensioner budgets, and will provide a temporary boost to over 65s labour market activity.
The coronavirus-induced growth in economic inactivity has been driven mostly by increases in the number of long-term sick, students, and to a lesser extent by a rise in retirees caused by an ageing population. Though young people enter the workforce every year as they leave education or training and many pensioners are returning or remaining in the job market, new entrants are still outnumbered by the number of people ageing out of the workforce.
Economic inactivity amongst those aged 16-24 has risen 2.4 percentage points since the start of the pandemic in March 2020 as many young adults sidestepped the spring 2020 labour market in favour of training, sixth form or university. However, many of these options are now winding up. Young adults who delayed entering the labour market during the initial phase of the pandemic will join the workforce over the coming months.
The headwinds of ageing and long-term illness are not going to disappear anytime soon, but the pandemic-era surge in education should shift to a labour market tailwind as students graduate into a suddenly softer economy.
Even as the labour market is loosening, demand for new roles will heat up amongst job hunters. After a lull in search activity during the summer, people typically return to job hunting when September hits. As the below chart shows, between August and September, job applications on Glassdoor increase about 10 percent due to seasonality alone – the second largest month-to-month increase after the New Year peak.
Applications typically increase even further from September to October (3 percent), making a total increase of about 14 percent from summer to autumn as the summer holiday season ends and employees begin looking for Christmas work. Although competition for jobs will increase, the start of seasonal work hiring and the still-tight labour market means that employers looking to hire will continue to face an uphill climb in September.
With negative real wage growth thanks to near-record levels of inflation and no end in sight to the economic headwinds, it’s no surprise that employees’ concerns about inflation, layoffs and energy bills show no sign of stopping.
Discussion amongst employees demonstrates the durability of these concerns. The chart below shows the rise in mentions of energy (and related words like heat/heating, gas and electricity) and layoffs (and redundancies, fired, etc.) among employees in more than 150,000 posts and comments on Fishbowl by Glassdoor, a social network for professionals. In the six months since February 2022, mentions (measured by a three-month trailing average) have increased 33 percent and 81 percent respectively.
Glassdoor reviews also show that concerns about inflation continue to grow sharply. While employees rarely mentioned inflation or the cost of living before December of 2021, negative mentions have increased over four times since then. And while many commentators have expressed their beliefs that workers will return to the office en masse to escape their rising energy bills, reviews show that office discussion remains low post-pandemic: for instance, positive discussion of in-office amenities such as a gym, kitchen, or microwave is still much rarer than pre-pandemic (declining by 55 percent from March 2020), with only a small increase (12 percent) since summer 2021.
While the labour market remains hot, it is showing signs of cooling. Employers will still face a difficult time hiring, however, as job vacancies are likely to remain at a high level in the months ahead. Concerns about inflation, layoffs and energy bills continue to rise among employees as price increases show no sign of slowing down. Perhaps as a response to the crisis, pensioners have reentered the labour market even as economic inactivity remains high as the population ages and the numbers of long-term sick have increased.