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Although the Office for National Statistics (ONS) reported on Tuesday that the total of vacancies had declined slightly in recent months, the number still topped 1.13 million at a time when the percentage of the population registered as unemployed remained at a near-record low of 3.7 per cent.

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Business reaction

Both the Confederation of British Industry (CBI) and British Chambers of Commerce (BCC) said the continuing skills shortages reinforced the need for the government to expand the Shortage Occupations List to make it easier for companies to attract overseas talent.Jane Gratton, head of people policy at the BCC, said: “Businesses are crying out for people to fill job vacancies at all skill levels, and this must be the number one focus for government if it’s serious about economic growth.“There are still a huge number of vacancies, currently sitting at 1.134 million, and this is stopping firms in their tracks. It means they are struggling to meet the orders on their books, and it puts any plans for growth far out of reach.“Businesses should play their part by adopting flexible working policies, wherever possible, and by supporting staff training needs.“And crucially, government should reform the Shortage Occupations List to help firms fill urgent job vacancies from outside the UK when they cannot recruit locally. The list should include jobs at all skills levels where there is clear evidence of a national shortage.” 

Upcoming Budget presents opportunities

Matthew Percival, director for people and skills at the CBI, said that while there were "tentative" signs that more people were looking to get back into work, there remained very high vacancies and that businesses were having difficulty to fill them.“The upcoming Budget is the opportune moment for the government to now make some real progress on the workforce shortages the economy is struggling with," he said."That requires action on a number of fronts, including expanding childcare, updating the Shortage Occupations List and widening the scope of employer health support as a non-taxable benefit to prevent and treat some of the key drivers of long-term absence."The ONS report also recorded the fact that regular pay had grown at an annual rate of 6.7 per cent between last October and December - the fastest in more than 20 years - although it still lagged behind the current inflation rate of 10.5 per cent.Chancellor of the Exchequer Jeremy Hunt described the fact the low unemployment rate as "an encouraging sign of resilience in our labour market". He added: "The best thing we can do to make people's wages go further is stick to our plan to halve inflation this year."According to the ONS data, the number of payrolled employees rose by 102,000 in January, meaning that 768,000 more people were on payrolls than a year earlier. Since February 2020, when Covid-19 first became an issue, the number of payrolled staff has increased by 1,028,000.

Labour market activity remains high

Jonathan Boys, senior labour market economist at the Chartered Institute of Personnel and Development (CIPD), commented: “This Valentine’s Day employers are struggling to make a match with the right candidates due to the continued imbalance between supply and demand."Vacancies, though falling, remain above one million showing demand is still strong, but the right candidates are in short supply. At just 3.7 per cent, unemployment remains low so fewer people are available and looking for work.“When candidates are in short supply and even bumper pay rises can’t compete with inflation, employers need to consider the whole package they offer to staff."James Reed, chairman of recruitment company Reed, said that the firm had seen a 22 per cent rise in people applying for jobs in January compared to a year earlier."This is a trend that has continued in February – so far, we’ve seen a 19 per cent, year-on-year increase compared to the first two weeks of February 2022. And we are still seeing a good number of jobs being posted," he said.“The job market remains healthy despite talk of Britain only narrowly avoiding a recession. A key factor driving the boost in job applications that we are seeing is the cost-of-living crisis. People are recognising that one way in which they can secure a pay rise is to move jobs."

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