Jobs market enters new phase as firms go on hiring spree but UK still has 4.2 million ‘Covid employment gap’ to fill

The second highest monthly increase in payrolled employment on record, coupled with vacancies returning close to pre-crisis levels, show that the labour market is entering a new phase as it reopens and recovers – but a return to its pre-pandemic health is still a long way off, the Resolution Foundation said today in response to the latest ONS labour market statistics.

The reopening of parts of the economy drove a big fall in furloughed workers, while strong growth in other sectors drove a 97,000 increase in payrolled employment in April – the second highest on record. Encouragingly, this employment growth was strongest among young and older employees – the two groups who have been hit hardest by the crisis.

The Foundation notes however that the fall in payrolled employees (down 772,000) and self-employed workers (270,000) since February 2020, along with the estimated 3.1 million workers still on furlough, mean that the UK still has a 4.2 million ‘Covid employment gap’ to fill in order to return to its pre-crisis health.

But while filling the Covid employment gap is essential, big differences in how sectors of the economy are recovering suggest that the labour market is unlikely to return to its pre-crisis structure.

The switch from physical to online retail is affecting both consumers and workers – with potentially huge impacts on both our high streets and the need for people to move to jobs in different sectors of the economy.

Recent Adzuna vacancies data shows that while catering and hospitality vacancies have returned to pre-crisis ahead levels of the ‘big reopening’, wholesale and retail vacancies remain a quarter down, while logistics, transport and warehouse vacancies are up 250 per cent on February 2020 levels.

Managing these potentially huge structural changes in our labour market – an issue that the UK has historically struggled with – will be key challenge for policy makers, and a key focus of the Resolution Foundation’s new Economy 2030 Inquiry launched today.

Hannah Slaughter, Economist at the Resolution Foundation, said:

“The labour market has entered a new phase, starting to recover in April as the economy reopens, with the number of payrolled employees increasing by almost 100,000.

“But the UK’s 4.2 million ‘Covid employment gap’ shows we still have a long way to go to return to pre-pandemic employment levels.

“And early signs are emerging of which big structural changes from the pandemic will last, with hospitality bouncing back even as jobs in high street retail are not. Adapting to this changed world will be a key challenge for workers, and policy makers, in the years ahead.”

Notes to Editors

  • The 270,000 self-employment fall adjusts for the percentage of self-employed who move into employee jobs, and is therefore lower than the headline fall.