Hello, everyone.
Jack Kennedy, economist with the Indeed Hiring Lab
here with the UK labor market update at the start of 2022.
In this video, I'll cover a few topics.
I'll start by looking at where we are in the labor market
recovery, then turn to shift in the types of jobs
candidates are interested in.
I'll look at the evidence around the so-called,
"Great Resignation" and what's driving
high job switching rates.
And finally, what's the main labor
market trends to watch out for in 2022.
Looking at the broad picture, the UK labor market
staged an impressive comeback from the pandemic last year.
Not only has unemployment stayed low, largely thanks
to the furlough scheme, but demand for new workers
has roared back to break new records in recent months.
Rather than the previously feared spike in unemployment,
instead we have the tightest labor market in decades.
And the most pressing issue for many employers
is worker shortages.
Nonetheless, the labor market's recovery is incomplete.
Employment has been recovering.
But it's still more than half a million
below its pre-pandemic level, largely
reflecting a big decline in self-employment.
Furthermore, the number of active people neither working
nor actively seeking employment is also over half a million
higher than on the eve of the crisis.
In addition to this, Brexit's curtailed the UK's ability
to easily fill gaps with workers from EU countries.
What all this means is that the number
of UK workers participating in the labor force
needs to increase substantially to plug those shortages.
Hopefully, labor market momentum will continue in 2022,
providing yet more opportunities and putting more people
into the workforce from the sidelines.
However, the pandemic continues to cast a shadow of uncertainty
with new variants or waves of the virus presenting downside
risks.
Turning now to job seeker interest trends,
to find out which jobs workers are looking at,
the Indeed Hiring Lab developed a metric
we call relative jobseeker interest.
This measures changes in interest
in an occupational category since the beginning
of the pandemic compared with the average job.
Positive change means that the occupation's
become relatively more attractive to job seekers.
In general, the biggest falls in relative job seeker interest
have been in lower paid sectors like cleaning, construction,
warehousing, and hospitality, where the supply of workers
hasn't kept pace with resurgent demand.
More broadly, Hiring Lab surveys find
that job search lacks urgency.
Even those currently out of work often
seem in little hurry to find new jobs,
due to factors including financial cushions,
caring responsibilities, and health concerns
related to COVID-19.
Meanwhile, interest has shifted toward higher paid occupations
like legal, tech, and health care.
That's partly due to the fact that job posting growth
in these sectors hasn't been as spectacular as
in many lower paid categories.
Outside of frontline health care, many of these
are occupations where working during the pandemic
has been relatively safe and comfortable
and in which remote work is more feasible.
Raising wages and offering hiring incentives
may be one way for employers in lower paid sectors
to bring in staff.
But it may not be enough on its own.
It may also be necessary to improve working conditions
and offer greater job flexibility to draw more
people back into the labor markets,
including older workers, disabled people, and parents.
Moving on now to job switching, there's
been much talk about what's been dubbed,
the "Great Resignation."
In the UK, as well as in other countries,
people are said to have reassessed their priorities
during the pandemic, with many leaving their occupations
to find something different.
But do the data really support this?
Both resignations and job-to-job moves jumped by a third
in the third quarter of 2021, reaching record highs.
Nearly a million people moved between jobs,
with 38% of these switches being resignations,
as we see in this chart.
But that's not a high level historically.
Rather than a mass reassessment of priorities,
what appears to be happening is that voluntary job moves are
ratcheting up as labor demand bounces back,
giving people more options.
Meanwhile, job switches that were
postponed during the pandemic have finally
had chances to take place.
Most of the third quarter jump in job-to-job moves
was driven by low-skilled and medium-skilled workers.
High vacancies, as well as rising pay in some sectors,
has given them greater opportunity and incentive
to move, perhaps for better wages or working conditions.
Over the past several months, the Indeed Hiring Lab
surveyed 5,000 workers, both employed and unemployed,
to learn more about job search behavior.
Our October survey showed that a range of factors
were motivating people to look for new positions.
Higher pay was cited by 44% of respondents, the most
frequently reported reason.
Changes of career path, better benefits, and more flexibility
were also popular factors.
Finally, what are the main labor market trends to watch in 2022?
Though the latest wave of the virus
is a near-term headwind particularly for sectors
like hospitality, why do labor market conditions
seem set to remain tight, spelling continued hiring
challenges for employers?
A key question is whether this tight labor market
will translate into a broadening of pay growth
across the labor market.
So far, strong pay growth has been
confined to a few sectors experiencing the biggest
shortages, though that could change.
Rising inflation gives workers whose skills are in demand
every incentive to push for pay increases.
But if pay growth threatens to run too hot,
the Bank of England could hike interest rates, which could
ultimately slow job growth.
So wage increases need to hit the sweet spot of protecting
living standards without prompting
policy makers to boost interest rates too swiftly.
Another question is how much further labor demand
can strengthen without an accompanying
pickup in labor supply.
So far, hiring has hit record levels.
But persistent worker shortages could eventually
impair the ability of businesses to expand further.
This could act as a drag on growth and feedback
ultimately into slower hiring.
That's all for now.
As always, you can keep up with our research on hiringlab.org.
That's a free resource that's available for anyone
who's interested in labor market insights.
Thank you for your time and attention.
Until next time, take care.