A winter chill has set in for the job market – or has it? Although job vacancies have fallen for four months in a row, they remain much higher than their pre-pandemic rates. Involuntary redundancies have also stayed low, even as they’ve slowly ticked up over the past few months.
Here are three trends we’ll be watching for in December’s labour market overview, out next Tuesday from the Office of National Statistics.
- Job vacancies are falling, but much slower than they rose in 2021.
- Healthcare employment will climb and vacancies in the industry will remain sky-high as the industry defies a possible recession.
- Redundancy rates will continue to grow but stay below pre-pandemic rates.
As the labour market continues to cool, Glassdoor data shows that workers are also growing more anxious as employees’ discussion of layoffs, recession and inflation have risen sharply over the past few months.
Job vacancies are falling but will remain robust
Job vacancies accelerated as soon as the 2021 January-April lockdown ended, especially in hospitality and travel. These industries were hit by a huge wave of consumer demand once lockdown restrictions ceased. However, growth in job openings has been slowing since the autumn of 2021, with a decrease every month for the past four. This pattern is expected to continue in December’s report.
Nearly every industry has seen a drop in job openings, but the number has fallen much more slowly than it rose in 2021, perhaps due to continued high levels of economic inactivity. This suggests that the job market will remain relatively robust even as consumers cut back on spending.
Healthcare remains a safe haven for workers
Job openings in healthcare (which includes social care) have remained strong, highlighting the sector’s potential as a relatively stable industry even if the economy tips into recession. The chart below shows the number of employed individuals in several sectors, including in healthcare (both for the NHS only as well as for the entire industry), construction and hospitality.
Both construction and hospitality are strongly cyclical, meaning they tend to be negatively impacted by recessions. Healthcare is a different story. Because the government funds around 80 percent of healthcare spending and most healthcare expenditures are non-elective, the industry tends to grow even through recessions. An ageing population also requires more spending on healthcare.
Even cuts in public spending, which may be behind the slight fall in NHS employment in the early 2010s following the Great Recession, haven’t been enough to derail growth in overall healthcare employment in the past. Other forms of healthcare more than made up for the drop in NHS employment, with total employment in the sector surging over the past decade and a half.
Growing demand for healthcare from an ageing population in combination with an acute shortage in employment suggests that healthcare will provide a relatively safe haven for job seekers even as the broader economy is buffeted by economic instability.
Redundancy rates will tick up, but keep low
Involuntary redundancies have been rising for the past few months as companies weather economic instability and high inflation. Especially notable are the high-profile redundancies amongst major tech firms, many of whom haven’t done mass layoffs for years – if ever.
Next month’s redundancy numbers are expected to reflect increasing layoffs; however, given the extremely high level of current job openings, employers can simply choose to cut back on recruitment rather than lay employees off. Since layoffs demoralise employees, with some research suggesting this effect may lead to decreased rather than increased firm profitability, many employers will be seeking other ways to cut costs rather than resorting to redundancies. Despite an increase in redundancies, we expect the level to remain below their pre-pandemic norm.
Employees increasingly worried about the economy
With our recent declaration of inflation as Glassdoor’s word of the year, it’s no surprise that discussion of inflation and the cost of living has continued to creep up. Mentions of either phrase in Glassdoor reviews from UK employees were up over 900 percent year-over-year in November. However, the rate of growth over the past few months appears to be slowing and mentions are levelling off.
Reviews mentioning layoffs and redundancies followed a different pattern, increasing from earlier in the year but remaining low in comparison to 2021. Interestingly, mentions since 2019 broadly reflect the pattern seen in ONS-measured involuntary redundancies, with a sudden jump in early 2020 followed by a sharp decline and a recent but still small increase.
Turning to Fishbowl by Glassdoor, a social network for professionals, our data tells a slightly different story. Though mentions of layoffs remain far below their peak in 2020, layoff discussion has surged in the past few months, increasing 440 percent year-over-year in November, in line with Google Trends internet search data and media coverage of layoffs. Taken together, these data points suggest that the gap between actual redundancies and public perception has widened over the past few months, as employees grow increasingly anxious about the prospect of layoffs.
Discussions about recessions and inflation have also grown over the course of 2022, although they have fallen in the past few months, perhaps reflecting employees adjusting their expectations to the new status quo after the initial shock of a slowing economy.
Conclusion
Even amidst record-high inflation and economic uncertainty, the job market has remained relatively robust. Job vacancies are expected to continue to fall even though the market is still robust overall. Similarly, redundancies seem poised to increase over the next few months but stay relatively low. Glassdoor and Fishbowl data suggest that the gulf between public perception of layoffs and actual experience is widening. All signs are pointing to a labour market that can withstand some recessionary headwinds as employers continue to face elevated economic inactivity and a difficult hiring market.
Methodology
Chart 3 (“Discussion of Inflation Steadily Climbs…”) is based on an analysis of more than 1 million reviews on Glassdoor, while Chart 4 (“Employees in Fishbowl are Very Concerned about Layoffs”) is based on an analysis of several hundred thousand posts and comments on Fishbowl. The analysis of each of our keywords included related words, such as downturn for recession, made redundant, redundancy/ies, layoff/s, and downsized/downsizing, for layoffs, and COL and cost of living for inflation.