Wellian Weekly 22.11.2021

Latest jobs data and the end of furlough

As the historic government furlough scheme has come to an end, the latest UK jobs data which came out last week from the Office for National Statistics has painted a rosy picture of the latest employment market as the number of people employed in the UK has risen and showed evidence that the labour market coped extremely well with the expiry of the wage subsidy scheme and that the workers receiving support are now being absorbed back into the labour market.

Looking back to when furlough was first introduced and covid restrictions forced businesses to close their doors, many people thought that we were heading for a jobs disaster, there was even talk of a 10% unemployment figure. Even over the last few months as the jobs market seemed to hold up when vacancy numbers rose and that they were struggling to find workers, there was still a fear that maybe it was all an illusion, and that furlough was masking the true picture and once the scheme ended then we would see unemployment numbers rise considerably.

When the furlough scheme wound up at the end of September, there were an estimated 1.1 million people still on the scheme. However, the latest PAYE estimates for the month of October saw 160,000 more people on the payroll than there were in September, and unemployment fell 0.5% to 4.3%, an outcome better that the market forecast. All things considered, it is looking pretty good considering the number of job vacancies reached over 1 million in October, although if those on furlough were made redundant at the end of the period then they will still be on the payroll for October because of redundancy pay. Businesses are still struggling to find workers and are having to put up wages in order to tempt people in.

This is something the Bank of England are going to be paying close attention to – Governor Andrew Bailey told MPs earlier this week that he struggled with his decision not to raise rates this month and that it was a close call for him, and of course with the cost-of-living spiking and inflation expected to hit 5%, could we see the change next month. We do get another round of job numbers two days before the bank meets in December, with the expectation that if the situation is unchanged or if the slight slowdown in new vacancies that we have seen this month doesn’t seem to hold and there wasn’t a big jump in redundancies at the end of September, then the bank will be under pressure to put rates up.

The UK labour market has coped admirably with the end of the furlough scheme, with increasingly positive data as a result, which points to a strong jobs market. Finding enough workers in key sectors has been a problem, however this has been a function of the economy recovering better than had been hoped.

 

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