By Gavin Mochan


These latest employment figures from the Office for National Statistics (ONS) are the first since the Government’s job retention scheme ended on September 30, but the data only goes up to the end of August so we are not yet seeing the full impact of furlough’s end. What is interesting are the emerging indications of what lies ahead.

Unemployment in Scotland in the three months to the end of August was 4.4 per cent, an increase of 0.1 percentage points. In September, only London and Scotland had fewer pay rolled employees than before the start of the pandemic; London is furthest behind its pre-pandemic levels but saw the largest increase on the previous month.

This was expected by most forecasters, but it is labour shortages that are holding the economy back, potentially leading to a perfect storm in the war for talent.


On one hand, higher levels of under-employment look likely, with employees returning from furlough but possibly not on a full-time basis. The number of part-time workers across the UK hasn’t yet exceeded pre-pandemic levels, but it is on the rise again, up 2% since the last release from the ONS.

There are signs that surging vacancies are easing – September ¬ grew just 2% month-on-month – but there were still 56,000 jobs advertised across Scotland. That was almost 10,000 more than the same time last year.

Employee reluctance to move job has held back resignations but if we get through the winter with no lockdowns, this could change rapidly. Confidence that the pandemic is largely behind us coupled with the number of attractive roles out there may lead to a significant increase in churn.

Companies have enjoyed artificial retention rates during the pandemic, yet the time bomb of pent-up staff turnover could be ticking. The average employee turnover rate in the UK is about 15% per year, but this could exceed 20% if companies fail to look after their staff.


Adding further fuel to the fire are increasing salary levels, with weekly earnings in the UK now at £581, up 7% on March 2020. That is above inflation, so there are some real salary improvements to be had out there.

What does this mean for businesses? Well, instead of hiring like crazy, employers will be juggling two different but equally pressing needs: hiring to backfill people who have left, and hiring for new positions to support growth.

To do this at a time when there are already too few people for too many jobs will be tough. As many as 65% of employers in some industries say hiring is more difficult now compared to normal expectations at this time of year. This inequality between supply and demand underscores that productivity is all about people.

The best way to stabilise operations and avoid this attrition storm is to increase retention. Focus on the people who stay, reward them as best as possible and recognise their achievements – appreciation and a sense of belonging are the hidden torpedoes to retention.

Gavin Mochan is commercial director at s1jobs