How can job vacancies have risen 345% in a year – but unemployment still be so high?

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New data reveals that the number of job vacancies in some sectors has risen a massive 345% in a year. Despite this, the UK unemployment rate is now higher than it was at the start of the pandemic.

So why aren’t these empty jobs being filled? And what factors are to blame?

What is the current unemployment rate?

According to the latest data from the Office for National Statistics (ONS), the current UK unemployment rate is 4.6%. This is 0.6% higher than it was before the pandemic and 0.86% higher than it was in2019.

In fact, the UK’s unemployment rate is now at its highest level since 2016, when it peaked at 4.81%. 

How many job vacancies are there?

Despite relatively high levels of unemployment, there were 1.1 million job vacancies between July and September this year, according to the ONS. This is the highest number of jobs available since records began.

According to City Plumbing’s School’s Out, Trade’s in report, nearly 100,000 of these empty vacancies are in the trade and construction sectors, which is roughly 8% of all open roles. This is a massive 345% increase compared to last year.

Aside from job vacancies, the report also revealed that 3.7 million working adults are considering switching to a career in the trade or construction sector, with plumbing being the most popular option. This suggests that there is a clear shortage of qualified tradespeople.

According to the report, the average advertised salary of a plumber now stands at £38,573. This is comfortably above the average UK salary of around £31,500 per year. Interestingly, heating engineer is now the most in-demand occupation amongst tradespeople, with the average role commanding a £44,305 salary.

Why is unemployment so high despite lots of available jobs?

While some may be tempted to point the finger at our ‘lazy society’ as the reason for the UK’s high unemployment rate, there are other far more plausible reasons behind the high number of job vacancies.

Here are four reasons why the UK has so many job vacancies, despite its high unemployment rate.

1. Lower migration

According to the Institute for Employment Studies, between ‘a quarter and a third’ of empty UK job vacancies can be explained by lower migration.

Some reports have previously suggested that as many as one million people left the UK as a result of its decision to leave the European Union. This has undoubtedly led to a shortage of people available to fulfil skilled roles.

2. The domestic skills gap

On a similar note to lower migration, it is widely understood that the UK does not have enough skilled workers to fulfil the number of available skilled roles.

Earlier this year, Kate Shoesmith, deputy chief executive of the Recruitment & Employment Confederation, said she feared the UK’s skills shortage has the potential to hamper the country’s recovery from Covid-19.

She explained, “With demand spiking, the skills and labour shortages that already existed in the UK have come into sharper focus – and Covid has only made them worse.

“This is the most pressing issue in the jobs market right now, and has the potential to slow down the recovery.”

3. Workers being reluctant to take on roles in hospitality

Last year, a number of hospitality roles were lost due to Covid-19. In addition, many hospitality workers had their hours cut, or jobs suspended at short notice due to successive lockdowns. As a result, its plausible many former hospitality workers have left the sector in favour of more secure roles.

It’s worth knowing that the majority of empty UK job vacancies are in the hospitality sector. This suggests there is an imbalance between the types of jobs workers are seeking, and the roles that are available.

4. Low wages and rising inflation

It’s no secret that the cost of living is on the rise, with the Bank of England recently suggesting that the inflation rate could hit 4% by the end of the year. Because of this, there may be an expectation among workers that wages should rise in line with inflation.

While average salaries are starting to climb, it’s possible many workers feel a number of roles still pay too little.

Will the UK’s unemployment rate fall?

While the unemployment rate is high, it’s clear to see why there is still a record number of job vacancies.

Whether the unemployment rate will fall over the coming months will mainly depend on two things:

  1. Whether the UK can address its skills shortage
  2. Whether employers have the appetite to pay employees more in a post-Covid world

To learn more about the impacts of unemployment and inflation, see the Motley Fool’s most recent personal finance articles.

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