Mid-July 2020 was a devastating time for the European Union (EU), the world and for the United Kingdom (UK) as COVID-19 surged across the regions. Since the lockdown began, fewer people were engaged in jobs and by August 2020, the UK was deep in debt for more than £2 trillion for the first time.
In March 2021, as the situation saw some light, the government declared renewed measures for businesses that were bit by COVID-19. As of May 2021, the UK job market is showing early signs of recovery as unemployment rates fell and hiring opened up. In fact, even the EU’s economy, in general, is currently showing signs of growth.
It is predicted that the EU economy will grow faster than ever in 2021 and 2022 due to accelerated vaccination drives and the gradual ease of restrictions. Recently, it was announced that about 175.3 million doses have been administered and around 30% of the population has received at least a single dose. Thus, the European Commission upgraded its forecast and estimated a positive growth of 4.2%. Brighter predictions are also due to the anticipated recovery fund of €750-billion from the Next Generation EU bloc. While the EU is still reeling under unemployment and rising debt concerns amidst uncertainty, the UK, by itself, is seeing a positive trend.
Since the start of the pandemic, UK job vacancies are at their highest levels. Employers have begun recruiting as lockdown measures are being eased. About 657,000 vacancies were advertised between February and April this year, pushing the numbers up by around 48,400 compared to the previous quarter.
The Office of National Statistics also provided their latest numbers indicating that unemployment rates have improved by 4.8% in March as against 4.9%. Yet, these numbers need to improve further, since the situation still remains 128,000 below the pre-pandemic levels. Recruitment companies are also seeing an increase in advertisements leading to another fear that there could be a shortage in labour.
Chancellor Rishi Sunak said the latest figures were due to the efforts put in by the government to protect job losses during the pandemic. He also said that nearly two million fewer people will be initially out of work, indicating that the government’s plan is indeed working. While the vacancy levels were welcomed by business leaders, they still thought that there was a long way to go.
People in the labour market are still struggling to find jobs. With such long breaks there are also concerns amongst experienced employees that companies might end up choosing someone much younger and cheaper for a job that previously paid well and seemed secure. Restaurants, on the other hand, are finding it hard to recruit workers and are finding ways and means to lure staff into their facility. Some are offering bonuses of up to £2,000 if they could refer friends to fill staffing shortages.
Upgrades in economic forecast in Europe
As a result of the vaccination, the EU Commission altered its economic forecast to estimate the growth at 4.2% with an expansion of up to 4.3%. This is an improvement from 3.7% and 3.8%, respectively, which was initially reflected in February. Similar volumes are also expected in 2022, where countries in Europe are expected to recover faster and return to the pre-crisis level, thus offsetting all the losses to achieve the coveted goal. While the unemployment rate seems higher at 7.6% in 2021, it is expected to recede to 7% by 2022.
UK Labour Market
- A decrease in unemployment rate was visualised between January and March 2021.
- The employment rate that was ideally estimated at 75.2% was about 1.4 points lower than it was before the pandemic, and 0.2% higher than the previous quarter.
- Even the UK unemployment rate estimated at 4.8% receded by 0.3 points than the previous quarter.