The latest ONS release showed another strong set of labour market figures. Payroll employment rose 241,000 in August, hitting 29.1 million and returning to pre-pandemic levels. Vacancies hit a record high of over a million in June to August, buoyed by improvements in all sectors.
With unemployment falling to 4.6%, the big question is what happens next, with the end of the furlough scheme looming at the end of this month. With over a million workers still on furlough, some of those are likely to find they won’t be returning to their old job.
In their favour is the backdrop of high demand for staff, with the majority of sectors seeing record vacancy levels and no sign that the labour demand upswing is about to run out of steam. But it remains to be seen whether those left unemployed after furlough ends will be in the right places and with the right skills and experience for the available vacancies, and whether those roles will offer the right pay and working conditions.
Notwithstanding that near-term upward pressure on unemployment, the main issue for the labour market overall right now remains labour shortages. With inactivity around 400,000 above pre-pandemic levels, finding ways of bringing more people back into the labour market will be key.