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Why are there so many jobs but unemployment continues to drop? How Covid, Brexit and changing attitudes to work could leave firms struggling in a recession

Much has been made of the current jobs market - record high vacancies sitting somewhat uncomfortably with the lowest rate of unemployment for decades.

Which begs the question: Where have all the workers gone?

We find ourselves in the unusual situation of low unemployment and sky-high vacancy rates
We find ourselves in the unusual situation of low unemployment and sky-high vacancy rates

While easy to point to Brexit and Covid as opening a drain of foreign labour we had once become so reliant on, the reality is that the situation is more complex than that.

Attitudes to work have been put in a spin-dryer by the pandemic. From key decisions in terms of striking the right home/work balance, to swathes of the upper end of the workforce opting to leave the world of employment altogether, it has altered the approach many have to work.

Many in careers in industries hit hardest by the lockdowns bailed out given the uncertainties they faced; others want to reclaim time for friends and families - opting not to work in jobs over the weekend or evenings. A key reason why hospitality, for example, is struggling to recruit.

While, according to a YouGov poll earlier this year, some 56% of those quizzed now want to work from home for at least some of the time, if not all, going forward.

All of which is creating one of the most significant changes to the world of work the country has seen in several generations.

Kent Invicta Chamber of Commerce chief executive, Jo James
Kent Invicta Chamber of Commerce chief executive, Jo James

So just what has caused the anomaly and just what impact is it having on the county? There have already been some high-profile casualties, with Ashford taxi firm Arrows forced to fold due to difficulties recruiting drivers - while Shepherd Neame admits a number of its pubs are having to shut earlier in the week due to lack of staff. Can firms survive with such holes in their staffing requirements and, crucially, where do we go from here with the dark clouds of a recession looming on the horizon?

"Personally," says Jo James, chief executive of the Kent Invicta Chamber of Commerce, which represents firms across the county, "I have a concern if we are heading towards a recession and businesses don't have the right staff and the right people they are going to really struggle, Particularly small businesses."

And that could lead to job losses and more empty commercial premises.

She adds: "In all the years I worked for the chamber, I've never come across a landscape like this."

The reasons behind this imbalance in a low employment rate and high vacancies is multi-faceted.

Firstly, according to the latest unemployment statistics for Kent and Medway, the percentage of working age people currently out of work stands at 3.6% - a figure which has been steadily declining over the last 12 months and is broadly in line with the national average.

However, it's worth noting that the 40,430 claiming unemployment benefit is still considerably higher than it was pre-pandemic. In February 2020, the month before the first lockdown was introduced, figures stood at less than 32,000 - which was equivalent of 2.7% unemployment in Kent and 3.2% in Medway.

Cast your mind back five years to 2017, and unemployment rates in Kent were a mere 1.7% and 2% in Medway and stood at less than 20,000.

It's worth remembering when hearing the repeated refrain that the UK is currently recording its lowest rate of unemployment for 50 years. That's not necessarily an accurate picture for Kent where the rate has actually gone up.

Yet despite the apparent increase in those out of work in the county, we are far from isolated from the current fluidity of the jobs market.

The hospitality industry has been hit hard by the shortages - but the issues are being felt across various sectors
The hospitality industry has been hit hard by the shortages - but the issues are being felt across various sectors

While the hospitality industry has been struggling to fill its rotas ever since life started to return to some form of normality, a shortage in staff is, according to Jo James of the Kent Invicta Chamber, being seen "across all sectors".

And firms are being slow in responding to the need to recruit and the lack of people seeking work.

"I've never had so many businesses, across all sectors, with exactly the same problem," she says.

"The other problem is firms are recruiting using old practices from before the pandemic - and that's not working.

"Previously, you'd advertise your vacancy, you'd draw up a shortlist of candidates, get them in for interviews - often for a second one - but the employer was in control of the situation.

"I've never had so many businesses, across all sectors, with exactly the same problem..."

"You can't do that now. That's where employers are missing out.

"Unless you're quick off the mark there are so many jobs and choices out there it is such a candidate-driven market at the moment.

"If you do any delaying process, they've gone somewhere else.

"Businesses are now starting to struggle and suffer because they've not got the staff in place."

So just what has happened?

Dr Catherine Robinson of the University of Kent
Dr Catherine Robinson of the University of Kent

"Just why we have an imbalance in the jobs market now is a tricky question," says Dr Catherine Robinson, an economist at the University of Kent, "and basically it's a culmination of a number of factors.

"We have been hit by Brexit - so an awful lot of labour that was here has retreated back to Europe as they find the UK a less friendly place. Also, with Covid, I think people don't want to travel too far away from their country of origin for work. So there's been a retrenchment along national lines.

"The other part is, following on from the pandemic, there was this big wave of furlough which really supported industries to carry on despite the basic shutdown of the economy.

"That caused uncertainty in the labour market, so people held on to their jobs but of course, and we see it in particular around hospitality, there was a need to cut costs within businesses as the furlough scheme became less and less generous and then stopped. Then they had to lay people off as they were uncertain about how things were going to pick up in the future.

"So there was a disconnect between labour and businesses which meant many weren't ready - particularly in travel, hospitality and tourism - when things fully reopened and demand ramped up.

Chancellor Rishi Sunak helped many with the furlough - but as it ended, many left key sectors and are so far showing few signs of returning
Chancellor Rishi Sunak helped many with the furlough - but as it ended, many left key sectors and are so far showing few signs of returning

"What we used to think of as the gig-economy in terms of flexible contracts, when the world shutdown that flexibility worked against people. So people have moved out and decided they don't really want to move back in."

Take a look at the recent Office for National Statistics data on where vacancies are nationally and they range from sectors as diverse as manufacturing to finance, science to education.

All of which begs the question, where have these people gone?

While Brexit and Covid has deflated the number of international workers, another noticeable drop off is those in their 50s and 60s. And not just as many sought early retirement against the backdrop of the fears stoked up by the pandemic.

Explains Catherine Robinson: "Participation rates in the labour market, particularly among the 50s-plus did probably decline more than we thought it would.

Working from home was far from perfect for many - but the majority now want hybrid arrangements
Working from home was far from perfect for many - but the majority now want hybrid arrangements

"This was a decline in men more than women which would suggest this is about changes Covid caused. It could be due to a push for greater use of technology in the workplace and typically the over-50s are less adept in that environment.

"That shift to online working, working from home, dealing with Zoom and online technologies - maybe it wasn't best suited to older workers than it was to younger ones.

"But we are also seeing older workers are less inclined to remain the labour market. That could be partly due to technology, or related to pensions or a change in attitude following the loss of loved ones during Covid. It's shifted people's priorities.

"People are looking for less intensive work, greater flexibility, a better work-life balance, and all of that reduces the number of hours people are working even if you're not seeing people moving out of the labour market.

"We're still analysing the data to see what exactly has happened."

A looming recession is making many firms desperate to recruit the right people to see them through the upcoming storm
A looming recession is making many firms desperate to recruit the right people to see them through the upcoming storm

Of course, the economic outlook is hardly giving companies reasons to feel confident moving forward.

As the cost-of-living squeeze continues and inflation and interest rates rise, there are very real fears a recession is just around the corner.

Adds Jo James: "When you have a recession, the thing to do is not to cut people but to have the right people with the right skills to take you forward. That's what you need and that's what they need to be doing now as we know it's coming.

"We know there's nothing worse than uncertainty for business, but the fact we know it's going to be bad gives us certainty for us to plan around.

"But you can only do that if you've got the people."

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