Closer inspection of UK jobs market reveals economic scars of Covid

theguardian.com:

At first glance, the UK jobs market is in rude good health. The unemployment rate is back to where it was before the Covid pandemic arrived two years ago and job vacancies are at a record high.

But just as X-rays can pick up health problems not detectable to the naked eye, so a closer inspection of the labour market shows up some hidden damage. The Covid crisis has not led to the sharp increase in joblessness that was feared but it has still left scars.

The number of employees is more than half a million lower than it was in early 2020, primarily due to people over 50 no longer working. According to the Learning and Work Institute thinktank there would be 1.25 million more people in the labour market had pre-pandemic trends continued.

The Office for National Statistics (ONS) says there is no one reason for the rise in inactivity. Some have decided to stop working due to ill-health, officials believe, while the events of the past two years have convinced others that the time is right to call it a day. Whatever the reason, demand for workers currently exceeds supply, which is why the number of vacancies is so high.

Unsurprisingly, employers are responding to the dearth of workers in a variety of ways. They are offering part-time staff longer hours, they are offering sign-on bonuses to new recruits, and they being forced to raise pay rates. The ONS thinks it is possible some of the inactive older workers may be tempted back into the labour market as the cost of living crisis bites harder over the coming months.

For public sector workers, falling real pay is already an issue. While bonus payments mean the earnings of people in the finance and business sector have risen by an average of 9.8% over the year to February – well above