Furlough scheme could 'hinder UK's economic growth' as job vacancies soar

UK jobs listing site Reed saw the highest number of job postings in May, the best month for vacancies since February 2008, but warned the furlough scheme was hindering the hiring process.

Reed recruitment added 275,000 roles in May alone — a 26% month-on-month (MoM) increase and a 237% year-on-year increase.

All regions across the country saw a rise in month-on-month job postings last month, with opportunities in the East Midlands increasing by 163%, East of England by 26%, and London by 18%, the company said.

Job postings in the capital soared 319% year-on-year. This was the second largest YoY growth percentage, suggesting London is recovering as measures ease.

The furlough scheme was making it "harder to recruit" workers, chairman of Reed recruitment, James Reed said. "The furlough scheme was a vital weapon in our fight against the pandemic last year but, as time has worn on, it could hinder the economy’s recovery and growth."

According to HM Revenue & Customs figures, 4.9 million workers were furloughed as of 31 January 2021, with provisional figures suggesting this had decreased slightly to 4.7 million in February.

Read more: UK restaurants struggle to recruit after Brexit and COVID double whammy

Sector wise, roles in the transport and logistics rose by 261% MoM, with retail up 55%, banking up 40% and customer service (up 37%).

Hospitality and catering vacancies rose 37%, jobs in the sector in London more than doubled during April, with a 189% increase in jobs added to the website.

Despite that, the sector has been battling job shortages as restaurants struggle to hire employees due to COVID and Brexit has added to the strain, according to UKHospitality.

Brexit negotiations and COVID created a "perfect storm" last year, Reed said.

He added: "These workers are not available right now and, as we emerge out the pandemic, it’s important to attract them back one way or another to plug the skills gaps we are seeing. A relaxation of work visa rules for EU migrants or another policy which encourages these workers back will be essential in the coming months. Otherwise, the UK’s economy may not be able to grow as quickly as many hope."

Watch:Furlough scheme and self-employment grant extended until September

Similarly, UK pubs and restaurants have blamed both the coronavirus pandemic and Brexit for staff shortages across the industry. The problem has become particularly acute since indoor dining resumed last month.

Experts have said the jobs crisis could derail the hospitality sector's recovery from the pandemic, if the staff shortages continue.

On whether there could be sustained wage inflation, Reed added that the changes in the labour market were likely to "last for a significant period and many businesses will struggle to attract workers as the economy reopens."

"One obvious way employers can make themselves more attractive to jobseekers is by raising their wages. The best way to achieve this is by raising productivity so businesses can pay people more. The companies that do this will win in the new economy."

Read more: Brexit-supporting Wetherspoon boss calls for more immigration to plug staff shortages

A separate report showed on Wednesday there have been around 100 million jobs lost worldwide due to the coronavirus pandemic.

Figures from the International Labour Organisation (ILO) take into consideration both jobs which have gone completely, and the total equivalent from employees who have lost hours or been furloughed.

The global workforce is recovering from the crisis, but even a strong economic rebound will not be enough to erase the scars of COVID which will hamper workers’ prospects for decades to come, the head of the ILO warned.

Globally, youth employment fell 8.7% in 2020, compared with 3.7% for adults, with the most pronounced fall seen in middle-income countries.

The number of "inactive" people in the jobs market — those who are neither in work nor looking for work — rose by 2.7 percentage points, nearly four-times the increase suffered during the financial crisis.

Despite this, the recovery should continue as vaccines and stimulus programmes help bolster economies, particularly developed nations, to reduce the shortfall to 26 million jobs next year, according to ILO.

Watch: Brexit-supporting Wetherspoons boss calls for more EU migration