In the autumn of 2021, headlines were dominated by record job vacancy numbers, providing some much-needed optimism about future labour market conditions. This contrasted with serious labour shortages in some occupations, such as lorry drivers and agricultural workers. Between February and July 2021, UK salaries for driving jobs reportedly increased by more than seven times the average wage growth for all jobs.
Despite this supposed excess in job vacancies, many people were still struggling to find jobs, prompting a £500 million extension to post-Covid-19 support for poorer families. How can it be the case that so many people are struggling to find work at a time when many firms are desperate to hire more employees? While the long-term effects of the Covid-19 pandemic on the labour market remain to be seen, this all points to an increase in skills mismatch between jobseekers and jobs. If true, this has worrying implications for structural unemployment and aggregate output in the UK.
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