How employment changed during the COVID-19 pandemic

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We all know that the coronavirus pandemic impacted employment enormously – from the introduction of furlough to the knock-on effect of redundancies and everything in between.

The world of recruitment was shaken up, with an abundance of candidates looking for work in a market with next to no vacancies. This of course impacted the job stability of recruiters, too.

Now, in 2022, we’re back in a candidate-driven market with a record number of vacancies. With restrictions, aside from travel, a thing of the past and most of the UK population vaccinated, we’re seeing a 180 in employment figures. This is especially positive when also considering the undeniable effect of Brexit on UK supply chains.

So what did pre-pandemic employment figures look like and how did they change from the start of 2020 to the end of 2021? We’ve combined all Office of National Statistics Labour Market Overview reports covering this timeframe to compare.

To start, let’s recap on the key changes that impacted industries across the UK, both positively and negatively.

 

Timeline of key coronavirus measures that impacted employment (excluding travel restrictions)

  • March 23rd 2020: First national lockdown
  • May 10th 2020: Return to workplace advised with guidance to limit the use of public transport
  • June 15th 2020: Non-essential shops re-open
  • July 4th 2020: Local lockdown in Leicester
  • August 3rd 2020: Eat Out to Help Out scheme introduced, boosting hospitality
  • August 14th 2020: Restrictions eased further – indoor activity centres open
  • September 22nd 2020: Return to working from home and 10pm hospitality curfew
  • October 14th 2020: Three-tier system of restrictions introduced
  • November 5th – December 2nd 2020: Second national lockdown
  • December 21st 2020: Tier 4 restrictions introduced
  • January 6th 2021: Third national lockdown
  • April 12th 2021: Non-essential retail, hairdressers, public buildings reopen
  • May 17th 2021: Indoor venues reopen
  • July 19th 2021: All restrictions dropped – nightclubs reopen

Check out a more comprehensive timeline here.

 

An overview of the impact on employment

Many sectors were unable to provide their services throughout the pandemic, including accommodation, hospitality, health and beauty services, entertainment, non-essential retail, nightlife, and more. Meanwhile, other sectors saw increased demand, including health services, essential retail, and delivery services.

Government measures enabled many employees and self-employed people to retain an income throughout the pandemic, while many were unfortunately made redundant due to the knock-on effect on business.

To look at how this impacted the population of the UK, we’ll cover four main sections in this article:

  • Employment rate: the percentage of the working-age population in employment
  • Unemployment rate: the percentage of the working-age population not in employment
  • Redundancy rate: the number of people per thousand who have been made redundant or taken voluntary redundancy
  • Vacancies: the number of available job openings

Continue reading for the breakdown based on ONS data. The main highlights have been referenced to create an overview of the impact from January 2020 to December 2021. Please note any reporting inconsistencies are reflected (due to differences in figure reporting in each ONS report).

 

Employment rate

The pre-pandemic period is considered by ONS to be Jan 2020 to March 2020, during which time the employment rate was 76.6%.

By May 2020, the number of employees on payroll was estimated to have dropped dramatically by over 600,000 compared to March 2020 – and down to 650,000 in June 2020.

From July to November 2020, the employment rate was between 75.2% and 75.3% – 0.8% down from a year earlier. Between October and December 2020, it dropped further to 75.0% – 1.5% lower than the year prior.

Things began to pick up in December 2020, and in January 2021, as 83,000 more people were payrolled. This represented a second consecutive monthly increase. However, this was still 726,000 fewer people than in February 2020, before the impact of the pandemic hit.

Fortunately, 68,000 more people were payrolled in February 2021 – a third consecutive monthly increase. Then, in March 2021, the employment rate crept back up to 75.1%.

The figures improve in early 2021

Real signs of recovery took place from February to April 2021, and the employment rate rose to 75.2% – this continued until July 2021. By May 2021, the number of payrolled employees had increased for the sixth consecutive month, up 197,000 (28.5 million). This was still 553,000 fewer than before the pandemic. However, it then shot up by 356,000 in June 2021 (28.9 million), and some regions were finally above pre-pandemic levels, including the North East, North West, East Midlands, and Northern Ireland.

By August 2021, payroll employees were up 241,000 to 29.1 million, returning to pre-coronavirus levels. In September, this rose to 29.2 million, and from October to December, the employment rate was 75.5%. Job-to-job moves also reached record numbers in this quarter, reflecting a rise in vacancies and job confidence.

 

Unemployment rate

From January 2020 to March 2020, considered pre-pandemic levels, the unemployment rate was 3.9%. This inevitably rose sharply, reaching 4.8% in July to September 2020, then 4.9% from August to October 2020.

The unemployment rate peaked from October to December 2020 at 5.1% – 1.3 percentage points higher than the previous year. It then slowly decreased to 4.9% by March 2021, and by June 2021 it was down to 4.7%. In the final quarter of 2021, it had decreased by 0.2 percentage points on the previous quarter to 4.1%.

 

Redundancy rate

July to September 2020 saw a record high of 314,000 redundancies – a massive increase of 181,000 on the quarter. By October 2020, this was replaced by a new record of 370,000 – and from September to November 2020, 14.2 per thousand people were redundant. Fortunately, this had reduced from October to December 2020 to 12.3 people per thousand employees.

By June to August 2021, with a return to pre-pandemic levels, the redundancy rate was down to 3.4 per thousand. In the final quarter of 2021, the redundancy rate sat at a positive new record of 2.1 per thousand.

 

Vacancies

From March to May 2020, there were 476,000 vacancies, which was 342,000 fewer than the previous pre-pandemic quarter (610,000). Then from April to June 2020, vacancies hit the lowest level since the Vacancy Survey began in 2001 at an estimated 333,000. This rose by 10% to 370,000 in May to July 2020.

From March to May 2021, vacancies were at a much healthier figure of 758,000 – just 27,000 less than pre-pandemic levels. Then from May to July 2021, there were 953,000 vacancies, exceeding pre-pandemic levels by 290,000.

Astonishingly, from June to August 2021, the figure rose past one million for the first time since records began – and this continued to rise. A new record was reached from October 2021 to January 2022, as vacancies rose to 1,298,400, however the rate of growth showed signs of slowing down.

 

Summary

Employment shifted vastly over the duration of the pandemic, breaking both record lows and highs. Fortunately, the recruitment landscape appears to be a lot more stable for 2022, with a soaring number of vacancies and candidates open to moving jobs.

We’re excited to be introducing our game-changing pay and bill software at this pivotal time for UK recruitment agencies with increasing invoicing and billing requirements.

Here’s a useful table embedded from the ONS website to summarise the key changes in Q4 2021  since pre-pandemic levels:

 

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