What do Christmas puddings and the latest vacancy statistics tell us about UK unemployment in the months ahead?
A third fewer people bought their Christmas pudding by the end of October than last year. If ever there was to be a measure of public confidence, the humble Christmas pud says it all. So, when will that lack of confidence hit the job market and what will recession mean for UK unemployment?
600,000 early retirees, but was that the right decision?
600,000 UK workers have retired early, perhaps encouraged by the pandemic’s downtime, as the pre-retirement population were treated to a trial run of what their future might look like. ‘Not at all bad’ appears to be the opinion of over half a million of them, who chose not to return post furlough.
Latest statistics from recruitment firm Reed reveal that at least some of those are now looking to re-enter the jobs market. As Chairman James Reed said in response to an 8% increase in applications since September;
““If you did a spreadsheet in 2020 doing some calculations about potentially retiring early, your numbers would look pretty different than they would now.”
The big techs are starting to make redundancies
In Silicon Valley, the big tech companies are starting to reduce jobs. Twitter will half its workforce. Meta (Facebook etc.) are cutting 11,000 and others are pruning back.
Some are blaming working from home – the theory being that home working erodes loyalty – out of sight, out of mind leads to bosses looking for economically viable solutions elsewhere, or wondering if the jobs they never see or interact with are really needed at all.
Will the UK recession come with high UK unemployment?
Recessions have never previously come without significant job loss, but this recession – the Bank of England now predicts the UK won’t emerge from it until 2025 – is different. Immediate job losses will be soaked up by current vacancies, but perhaps not all. In 2008 – 09 (financial crisis) unemployment reached 8% and previous recessions have topped 10%. Current predictions for this recession are between 5 and 6.5% unemployment.
So, will unemployment actually rise?
With 30m workers in the UK, a rise in unemployment of just 2% would wipe out the vacancies created by the 600,000 early retirees, but some of these are already starting to return to the jobs market. A return to 2008 – 09 jobless levels would see 2.4m unemployed. As unemployment is already 3.5%, the increase would be 1.4m, roughly equivalent to today’s unfilled vacancies. It’s safe to assume that some of the 1.4m will find different work.
We would suspect that some current vacancies may be withdrawn due to diminishing employer confidence or consumer demand. But how many? 20% would remove a quarter of a million current unfilled jobs. Reed are already reporting a drop in vacancies, but these are still high – roughly 1.2m advertised jobs.
Unemployment will rise, but not at the rate seen in previous recessions. Building in all the factors above, and the latest gloomy economic forecasts, if unemployment reaches a higher than predicted 8%, overall unemployment would be 2.4m. Subtract from that about 1m vacancies that need to be filled, then adjust again for the current unemployed, we can see that around an additional 0.4m people would become unemployed.
A lesser impact than previous recessions, but still a sizeable number – about as many people as live in Edinburgh.
What will be the impact on home workers?
Past recessionary employer behaviour gives a strong indication that, in a recession and in the face of ambiguity about the value of a role, employers will cut first and ask questions later. Often in these columns I’ve advised that employers making redundancies should be very careful to cut the fat, not the muscle. Employers have a habit of going too far though, and the current ambiguity around the muscle vs fat debate arising from the home working culture is likely to result in more, rather than less redundancies.
Many organisations have effectively lost the ability to monitor workforce effectiveness, and some may be tempted to think they’re carrying a lot of dead wood, or jobs that can at least be off-shored if not lost altogether.
Now would be a good time for homeworkers to focus on becoming more visible to the decision makers.
Add to this another output from the latest statistics published by Reed – that fully flexible vacancies have reduced for the 5th month in succession from a peak of 16% of vacancies offering 100% homeworking to under 12% today.
Hybrid working is likely to prevail, but the balance of power between employers and employees is beginning to shift, of that there is no doubt.
What should businesses be doing now to prepare for recession?
See our earlier article for guidance on the steps that should be taken now by business leaders.
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