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Hospitality reopening drives hiring spree in red-hot jobs market

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The surge in employment shows how quickly the relaxation of restrictions has impacted the economy, said one expert. Photo: Getty
The surge in employment shows how quickly the relaxation of restrictions has impacted the economy, said one expert. Photo: Getty

The reopening of pubs, restaurants and bars led to a surge in the UK job market last month, new data revealed, but experts say this could mean more staff shortages.

Accountancy and business advisory firm BDO’s employment index jumped 1.57 points from 106.05 in June to 107.62 in July, the highest level seen so far this year.

BDO said businesses continue to report labour shortages, in part caused by the pandemic and Brexit, suggesting there is a strong job market for job seekers.

“The surge in employment is a timely boost and shows how quickly the relaxation of restrictions has impacted the economy,” said Kaley Crossthwaite, partner at BDO.

But this might not bode well for businesses as “one of the biggest problems faced by employers will be filling roles as both the pandemic and Brexit give rise to staff shortages.”

The problem has been exacerbated by the "pingdemic" — employees, even if they have been vaccinated, getting alerts from the NHS COVID app telling them to self-isolate because they have come into contact with someone who has been infected.

This staff shortage "could well lead to a long-term trend of rising wages, which is already a contributory factor in the record high inflation index figure,” said Crossthwaite.

The outlook for overall employment levels remains uncertain, BDO said, with the forthcoming withdrawal of the furlough scheme in September likely bringing some instability.

Read more: 'Good time to be looking for new job' as UK starting salaries surge

Meanwhile, the BDO Inflation Index remained largely stagnant in July at 103.70, a slight fall of 0.13 points from last month.

But it represents the second highest reading since June 2017. The record high levels of inflation are being driven by broader pressure on global supply chains as well as more specific problems with importing goods and materials due to Brexit.

The high level of inflation is having an impact on businesses’ outlook. Despite the relaxation of lockdown in July, BDO’s Optimism Index fell by 0.53 points from June to July, reaching 111.92 points.

“While this fall does suggest some businesses are fearful about their recovery, business confidence as a whole remains at a relative high — July’s reading represents the second highest score since the series began in 2005,” the report said.

A separate report found that employers are desperate to attract talent in a tight labour market.

KPMG and the Recruitment and Employment Confederation (REC) said their survey of the UK jobs market found companies were upping pay at record levels. Average starting salaries jumped by the most in its 24-year history, according to the quarterly report.

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