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A Year Into the Pandemic UK Labour Market Shows Signs of Life

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With reopening roadmap, early signs of pickup in worst-hit sectors.

Key points:

  • Shifts in searches toward food, hospitality and beauty & wellness show jobseekers in hardest-hit sectors are ready to return to work.
  • Job opportunities in those sectors are down more than 60% from pre-pandemic levels, but there are signs of an early pick-up in postings in areas set to reopen soon based on the government’s reopening roadmap.
  • Jobseekers may find opportunities in sectors that have fully or almost fully recovered such as construction, healthcare and distribution, as well as in occupations which face recruitment challenges, such as social care and nursing.

One year on from the first lockdown, the UK labour market remains turned on its head. Swathes of the economy are still shut and furlough has been keeping large parts of the labour market in deep freeze. But the UK’s fast start to vaccination rollout is offering a roadmap out of lockdown, stirring hope of economic revival, particularly of the hardest hit sectors. 

The government’s Job Retention Scheme has been extended until the end of September, by which time the economy hopefully will be bouncing back strongly, absorbing slack as support ends. 

Furlough means the official unemployment rate — currently 5.1%, which is low by international standards — hasn’t risen anything like as much as had been feared earlier in the crisis. However, job opportunities remain well below pre-crisis levels. As of 12 March, job postings on Indeed UK were 31% below the February 2020 pre-crisis baseline. 

On the positive side, the impact of the second and third lockdowns on job postings has been nothing like what we saw from the first lockdown. It’s hard to say if there has been any Brexit effect since January. But job posting trends in other European countries have been fairly flat, suggesting the UK’s slow recovery isn’t due, at least entirely, to Brexit. 

Job vacancies are a barometer of an economy’s health, highly correlated with employment and economic output. High vacancy numbers keep unemployment low as employers absorb both new entrants to the labour market, like school leavers and graduates, and workers who become redundant. By contrast, low vacancies mean it’s hard for people to find work as businesses lay off more workers and government wage and income support rolls off.

The mix of jobs is very different from a year ago. The pandemic has had vastly contrasting impacts on different sectors of the economy. Worst-affected sectors have seen job postings fall to fractions of their former levels. At their nadirs, food preparation & service, hospitality & tourism and beauty & wellness had 80-90% fewer job postings than before the pandemic. Workers in shuttered sectors have been looking elsewhere, mainly toward sectors with low entry barriers. But, even as some sectors struggle, others, like social care and nursing, continue to face challenges finding workers. 

The lack of job opportunities in sectors like hospitality and retail has been particularly harmful to younger workers with less education. Many of them would normally gain early work experience in these sectors, but the pandemic has pulled this first rung of the career ladder away from them. 

If the government’s public health strategy is successful and follows its roadmap for safely reopening the economy, then the hardest-hit sectors could spring back to life in the foreseeable future. That could bring the labour market back to something resembling its former shape, offering hope to struggling jobseekers. The early evidence points to an upturn since the Prime Minister’s announcement, with employers posting more new jobs and jobseeker interest in these sectors rising. To get the labour market back on track, the progress must be sustained and strengthened, and confidence in the recovery must build. 

Hardest-hit sectors show early signs of picking up 

The Prime Minister’s roadmap announcement on 22 February specified conditional dates for a staged reopening of the economy if key health metrics are met. That gave employers visibility and new job postings on Indeed UK have responded. Since the announcement, categories among the first to reopen — such as sports, beauty & wellness and education & instruction — have been among those seeing the fastest growth in new postings, which we define as postings on Indeed for seven days or less.

The first stage of the roadmap was school reopenings to all pupils beginning 6 March. Outdoor sports are due to resume 29 March. Hairdressers, and nail and beauty salons are scheduled to reopen 12 April, along with nonessential retail. Pubs and restaurants can open for outdoor service on that date, but will have to wait until at least 17 May for indoor service. 

Jobseekers anticipating reopening sectors 

Jobseekers are anticipating opportunities in reopening sectors in their search activity. A variety of hospitality and food service roles are among the fastest-growing search terms on Indeed, along with terms relating to beauty, therapy, gyms, cafes and high street retail. 

We’ve seen these patterns before when the economy exited previous lockdowns. But those opportunities were short-lived as COVID-19 surges prompted reimposition of restrictions. 

At the same time, search terms relating to supermarkets, hardware stores, distribution and construction have declined in share. These are sectors supporting the stay-at-home economy and have been more resilient during lockdowns. Jobseekers focused their interest in them while opportunities elsewhere were scarce.

The mix of job postings is different than before the crisis

At this stage, the overall shape of the labour market is very different from what it was pre-crisis. Few sectors have escaped the downturn, but demand for workers has held up much better in some than others. 

On one hand, hospitality & tourism job postings were down 69% on 12 March from the 1 February, 2020, baseline, while food preparation & service postings were off 68% and beauty & wellness 61%. On the other hand, construction postings were 14% above the baseline, while medical technician postings were up 7% and loading & stocking up 3%. Community & social service (-1%), manufacturing (-2%), veterinary (-3%) and real estate (-3%) were nearly at pre-crisis levels. 

As a result, the composition of available jobs is different than it was before the crisis. Food preparation & service recorded the biggest drop in postings share, down five percentage points from last year. Sales, administration, customer service and accounting postings have also been declining in share. Conversely, the shares of postings in social care, nursing, construction, software development and manufacturing have increased. 

Hopes of a vaccine-driven recovery in the hardest hit sectors raise the prospect that the labour market might snap back to something like its former shape. Such a rebound could make recruitment harder in industries that have been tapping into some of those sector switchers. That would be on top of the increased difficulty recruiting from abroad caused by Brexit and the exodus of foreign-born workers during the pandemic. 

Workers in hard-hit sectors are looking outside their occupations 

Workers in particularly hard-hit sectors, like food preparation & service and beauty & wellness, have been looking at jobs in other sectors. The list below shows the biggest increases in outclick rates to job postings in other categories, based on the most recent job title listed on jobseekers’ CVs.  

High competition for jobs in sectors with lower entry barriers…

That interest is generally going toward sectors with lower entry barriers. Jobseeker clicks on postings give an indication of the sectors people are interested in based on their qualifications and preferences. We see which sectors are most competitive by looking at their number of clicks per posting. The sectors that have seen the biggest increases are those that require fewer qualifications and experience, such as customer service, administration and retail. But job postings are still much less plentiful in these sectors than before the pandemic. 

…but other sectors still face recruitment challenges 

Other areas of the labour market are not being flooded with applicants. Sectors requiring high qualifications, like software development, healthcare and engineering, still receive relatively few clicks per posting and roles remain relatively difficult to fill. 

For some positions, employers have to search hard for suitable candidates. This is particularly the case in social care, a sector in which jobs have long been hard to fill, along with nursing. Brexit may further complicate these challenges. The jobs shown below have been searched for most in Indeed’s CV database in early 2021. 

Jobseekers continue to cast a wider net

Jobseekers continue to be less specific in their searches than they were before the pandemic. Early in the crisis, the share of searches on Indeed UK in which jobseekers specified a location in the ‘where?’ box and left the ‘what?’ box blank increased substantially. These searches are a common way for jobseekers to explore what’s out there before narrowing down their job hunt. The share of blank searches is currently around 25%, down from 29% at the peak last summer, but higher than pre-crisis levels. Jobseekers apparently feel they still have to cast a wider net. 

Conclusion

Vaccines have shone light at the end of the tunnel and created hope that the labour market in general — and the hardest-hit sectors in particular — will recover. Optimism has been building that unemployment will peak lower than feared and well below previous recessionary highs. And a release of restrictions may unleash pent-up demand for services, at least from better-off households that have built savings during the crisis. 

Already, we can see tentative signs of a pick-up, and these are most welcome. But we’re only at the start of a long road back and the destination remains uncertain. The labour market is likely to be permanently altered in some ways. 

In particular, the office is not dead, but we may visit it less than we used to. That will have ripple effects on consumer-facing service sectors in cities, which rely on commuter footfall. Some retail spending will shift back to in-store from online, but probably not to previous levels. And even with domestic relaxation, restrictions on international travel are likely to continue for some time, damping businesses that rely on tourism. All this could mean that some of the sectoral shifts in job opportunities will persist.

The need is ongoing for the right information, support and training to help jobseekers navigate these changes, including greater options for entry-level roles. Such an approach could particularly benefit sectors facing recruitment challenges. 

Increased work flexibility could also help employers. The pandemic has upended previous norms and encouraged many employers to rethink ways of working. That re-examination could ultimately be beneficial both to them and their workers. 

Methodology

Job postings figures are the percentage change in seasonally adjusted job postings on Indeed UK since February 1, 2020, using a seven-day trailing average. February 1, 2020, is our pre-pandemic baseline. We seasonally adjust each series based on historical patterns in 2017, 2018, and 2019. Each series, including the national trend, occupational sectors, and sub-national geographies, is seasonally adjusted separately. 

For the mix of job postings, we compare February 2021 with the same period a year ago to account for seasonality in the demand for new workers. 

For searches of Indeed’s CV database, we compare January and February 2021 with the same period a year ago. 

For search terms analysis, we looked at the top search terms on Indeed UK as a share of all searches from February 26 to March 12. We looked at both the change in searches versus the previous two weeks and the change versus the same period one year ago to account for possible seasonality of search patterns. We accounted for fluctuations in search behaviour by calculating the seven-day moving average of each term’s search share.

For outclick rates, we identify the current occupation of the jobseeker from the most recent job title listed on their Indeed CV. Outclicks are clicks on jobs in different categories than the jobseeker’s current occupation. 

Candidates per posting is calculated as the share of clicks on a category divided by the share of job postings in that category. 

Information is based on publicly available information on the Indeed UK website and any other countries named in the post, is limited to the UK and other countries specifically named, is not a projection of future events, and includes both paid and unpaid job solicitations.