By Ian McConnell

Business Editor

THE surge in UK job vacancies has been “driven entirely by low-paying occupations” and competition for posts is for most people still fiercer than before the coronavirus pandemic, a key study published today reveals.

The research by the Institute for Fiscal Studies finds that for more than eight million people or around one-quarter of the UK workforce “vacancies in occupations relevant to them remain at least 10 per cent below pre-pandemic levels”.

And the independent think-tank calculates that nearly two-thirds of unemployed jobseekers “are from occupations in which the competition for jobs is at least 10% higher than it was prior to the pandemic”.

The IFS warns that people should “not be misled into thinking that worker power is back” amid prominent reports of labour shortages in certain areas.

And it observes that people with degrees “still face reduced opportunities”, compared with before the pandemic. Opportunities for those with degrees were in June still 8% lower than pre-pandemic, “driven by slower recovery in high-skilled service jobs in health, law and business”, the research shows.

The IFS says: “The surge in total vacancies has in fact been driven entirely by low-paying occupations, in which new job openings are around 20% higher than pre-pandemic.

“Vacancies in mid and high-paying occupations are still no higher than pre-pandemic.”

It adds: “The outlook for jobseekers is tougher still when you account for the fact that there are more people looking for new work and hence competing for these vacancies.”

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Xiaowei Xu, a senior research economist at the IFS and an author of the report on job opportunities during the pandemic, said: ‘While prominent stories about rising vacancies and labour shortages in certain areas are real, we should not be misled into thinking that worker power is back. The surge in aggregate vacancies in recent months has been driven by a small set of relatively modestly paid occupations.

“For people in many lines of work, new job opportunities remain well below their pre-pandemic level. And it is not just the number of job openings that matters, but how many people are competing for them. After all the disruption of the past year, there are more people looking for work than before. Most jobseekers will therefore find competition to be unusually stiff.”

The IFS notes in the report that “overall job vacancies now slightly exceed their pre-pandemic levels”.

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It says: “However, because the mix of occupations being advertised is not the same as it was before the pandemic, we estimate that new job opportunities remain more than 10% below pre-pandemic levels for a quarter of the workforce, or 8.1 million people.”

Highlighting the fact the recent recovery in vacancies has been “strongest in traditionally lower-paid occupations”, the IFS adds: “This largely, though not entirely, reflects the surge in road transport driving and storage vacancies. In fact, as of June 2021, vacancies in the lowest-paying third of occupations – when ranked according to pre-pandemic wage levels – are now 19% higher than pre-pandemic, while vacancies in other occupations have only just returned to pre-pandemic levels.”

The think-tank observes that competition for new jobs among unemployed former road transport drivers “is well below pre-pandemic levels”. And it concludes that competition for jobs in a “handful of other fields”, including waiters and bar staff, also “looks low compared with pre-pandemic”. The IFS notes that the lesser degree of competition for such jobs “is consistent with high-profile media reports about worker shortages in these sectors”.

However, the IFS research shows that for 64% of unemployed workers “competition for relevant new job openings is at least 10% greater than pre-pandemic”.

And the think-tank warns of potential for competition to intensify when the UK Government’s coronavirus job retention scheme, due to end this month, comes to a close.

The IFS says: “If some of the still-furloughed workers join the pool of unemployed jobseekers when the furlough scheme ends, competition would be stiffer still. The handful of high-profile labour-shortage occupations – while real and causing real problems for the supply of certain goods – should not mislead us into thinking that worker power is back.”

The think-tank meanwhile emphasises the importance of people’s skills and their line of work in the context of the current state of the labour market, highlighting its view that a focus on broad groups such as the “young” will not be sufficient in tracking recovery and forming policy.

It says: “The broad picture of buoyant vacancies in aggregate, but shortfalls of new job openings for many people alongside significant increases in opportunities for a minority, is seen across education levels, age groups and ethnicities. This suggests that a granular approach to tracking the labour market recovery and supporting those who are struggling will be necessary: a focus simply on broad groups, such as ‘the young’, may have a place, but it will not be enough. Much currently depends on the specific skill sets people have and the line of work they are in.”

The IFS adds: “Tracking the labour market recovery adequately, and designing policy in order to help that recovery along, is going to require a careful recognition at all times of the very different outlooks facing people in different lines of work.”

While noting job vacancies have “now recovered in aggregate”, the IFS observes “the new economy does not yet look much like the old”.

It adds: “As a result, a large share of workers still face lower job opportunities than before the pandemic. In particular, vacancies in higher-quality occupations have been slower to recover, and people with degrees still face reduced opportunities.”

The IFS observes that “competition for new job opportunities in June 2021 is higher for women than for men, and higher for those with degrees than for those with lower levels of education”.

It notes its analysis “does not directly capture changes in EU migration as a result of the pandemic and Brexit, though these may well be the cause of some of the job vacancies that we see”.

The IFS’s research, funded by the Economic and Social Research Council, uses data on workers and jobseekers from the Labour Force Survey, and online job vacancy data from search engine Adzuna, up to and including June 2021.