UK employment rebounds ‘robustly’ amid Brexit staff shortage fears

LONDON — The number of people at work in the U.K. continued to recover in July but businesses warned job vacancies rose to a record high due to the coronavirus pandemic and Brexit.

The Office for National Statistics (ONS) said Tuesday that the number of people in employment went up by 182,000 to 28.9 million last month, still 201,000 lower than before the pandemic.

The U.K.’s unemployment rate fell to 4.7 percent in the three months to the end of June from 4.8 percent previously, according to the agency. “The world of work continues to rebound robustly from the effects of the pandemic,” said Jonathan Athow, deputy national statistician for economic statistics at the ONS.

“Like the wider UK economy, the jobs market appeared to be on fire through the second quarter,” said analysts from Dutch bank ING in a note commenting on the figures, pointing to “optimism from the vaccine rollout” as one of the causes.

However, job vacancies increased to a record high of 953,000 in May to July — 168,000 more than before the pandemic. Preliminary payroll data indicates the number has now exceeded a million “for the first time ever,” according to Athow.

The British Chambers of Commerce warned the record vacancies confirm ongoing recruitment difficulties, which could have a detrimental effect on the economy.

“Although the changes to [coronavirus] self-isolation rules will help, with many firms facing a more deep-rooted squeeze on labor supply from the impact of COVID and Brexit, staff shortages may persistently weigh on economic activity,” said Suren Thiru, head of economics at the BCC.

Shortages have also driven up headline pay statistics, with wage growth hitting 7.4 percent over the period, the ONS said, while adding the figure should be treated with caution due to “compositional and base effects.”

The data come as the government winds down its furlough scheme, created to avoid deep job cuts during the pandemic by subsidizing the wages of furloughed workers. The scheme is due to finish by the end of September.

Chancellor Rishi Sunak argued the ONS figures prove the success of the government’s plan for jobs.

“I know there could still be bumps in the road but the data is promising — there are now more employees on payrolls than at any point since March 2020 and the number of people on furlough is the lowest since the scheme launched,” he said.

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