By Gavin Mochan


The headlines around this month’s UK unemployment figures have focused on the return of workers to company payrolls at levels matching those prior to the pandemic, a scenario scarcely any would have predicted just a few short months ago. But with the government’s furlough programme coming to an end in two weeks’ time, this story is far from over.

Regardless of what the future may bring, the present figures mask an uneven recovery across a choppy market. Along with London and the south-east of England, Scotland still has fewer payrolled employees than prior to the Covid outbreak. A further variable is the 700,000 decline in self-employed people across the UK, which goes part of the way towards explaining why the unemployment rate is higher than immediately prior to the pandemic.

At 4.6 per cent during the three months to July, the UK unemployment rate is 0.3 percentage points lower than in the previous quarter, but 0.6 points higher than pre-pandemic.


The estimated number of permanent employees in Scotland had been steadily increasing since the lows of November 2020, when there were 92,000 fewer payrolled workers than at the start of the pandemic. However, it is estimated that trend lapsed into reverse in August when numbers fell by about 25,000, or 1%, compared to February 2020.

It isn’t all bad news, of course: as widely reported, the number of job vacancies across the UK soared to more than one million in August for the first time since official records began, giving cause for optimism that employers are getting back on their feet.

In August there were nearly 55,000 roles advertised online across Scotland, down 5% on July because of the seasonal impact of summer, but up a whopping 43% on the same period a year earlier. Patterns suggest the number of vacant positions could surpass 70,000 in September, exacerbating an already challenging market for employers.

Here we see the “mass disconnect” between what employers require and what is on offer. Put simply, the skills of many of the unemployed don’t match up with the jobs that companies now need to fill.


Commentators who predict a quick easing of labour shortages say the end of furlough on September 30 will alleviate the strain, as some research has suggested a lack of urgency among furloughed workers to find alternative employment. The government’s employment retention scheme was supporting about 1.6 million jobs at the end of July, with approximately 820,000 on full furlough.

However, employers’ groups have warned this will not be enough to fill all shortages. In a similar vein, economists at Pantheon Macro have predicted the end of furlough will lead to an increase in both unemployment and underemployment.

Employers who feel they must have already started redundancy processes, but it will be at least another month before we see the impact of that. Till then, the tale of labour market recovery remains an open-ended narrative.

Gavin Mochan is commercial director at s1jobs.