Hospitality businesses are most likely to be struggling to fill vacancies

Hospitality businesses are more than twice as likely as other industries to be experiencing challenges in filling vacancies compared with normal expectations for this time of year.

Between 23 August and 5 September 2021, 30% of hospitality businesses said that vacancies were more difficult to fill than normal. This compares with 13% across all industries (up from 9% in early August).

Vacancy challenges are more common for larger businesses. Excluding those with fewer than 10 employees, 41% of businesses across all industries were struggling to fill vacancies in late August, up from 32% earlier in the month.

These difficulties coincide with a very busy time for recruitment, according to the latest labour market data, with hospitality among several industries posting record numbers of vacancies in June to August 2021.

Aside from hospitality (30%), the water (27%) and health (23%) industries were most likely to be finding it more difficult than normal to recruit staff in late August.

In the transport and storage sector, 15% of businesses were struggling to fill jobs. This may partly reflect reports of a shortage of heavy goods vehicle (HGV) drivers. However, despite being mainly employed in transport and storage, HGV drivers only account for around 1 in 10 jobs in the industry as a whole.

Businesses across all industries said that a lack of suitable applicants was the main reason for being unable to fill vacancies in late August 2021, with transport and storage firms the most likely to cite a lack of EU applicants specifically.

Of all businesses that were experiencing recruitment challenges, one in four (25%) said that a reduced number of EU applicants was a factor. This rises to almost one in two (46%) transport and storage businesses, the highest of any sector.

Transport and storage companies were also most likely to report an increased number of vacancies for “other reasons” (47%).

The survey question allows multiple responses, so it could be that some businesses are experiencing recruitment challenges because of a lack of EU applicants as well as “other reasons” (which could include border controls, retirements or difficulty in getting an HGV licence at short notice).

Some EU workers have left the labour market during the coronavirus (COVID-19) pandemic. The number of EU nationals employed in the UK fell by 8.7% between January to March 2020 and April to June 2021. Meanwhile, the total number of people in employment fell by 2.4% over the same period.

Industries experiencing recruitment challenges because of reduced EU applicants have also been affected by a fall in EU workers, according to the Business Insights and Conditions Survey (BICS).

In early August, transport and storage and hospitality businesses were the most likely to say they had fewer EU workers than in previous years (7%).

Data show that the number of EU HGV drivers fell by 43% in the year ending March 2021 compared with the previous year, while the fall in EU workers in hospitality may partly reflect an overall decline in employment within the industry.

Transport and storage businesses are most likely to cite a lack of EU applicants when unable to fill vacancies

Percentage of businesses finding it more difficult than normal to fill vacancies who said that a reduced number of EU applicants was a reason (23 August to 5 September), and percentage of all businesses reporting a decrease in the number of EU workers (26 July to 8 August), weighted by count

Data for businesses citing a lack of EU applicants when unable to fill vacancies and businesses reporting a fall in EU workers (XLSX, 26KB)

Notes:

1. Final weighted results, Wave 36 (26 July to 8 August) and Wave 38 (23 August to 5 September) of the Office for National Statistics’ (ONS’) Business Insights and Conditions Survey (BICS).
2. Mining and quarrying and other services have been removed for disclosure purposes, but its total is included in “All businesses”.
3. "*" indicates suppression because of small sample size.

There were 1,034,000 job vacancies in the UK in June to August 2021, an increase of 35.2% (269,300) on the previous quarter and the highest since the series began in 2001.

The hospitality and transport and storage industries were among those with a record number of vacancies in June to August, with job openings up by 59.1% and 32.5% respectively compared with pre-pandemic (January to March 2020).

While vacancies are at record levels, the total number of employees on UK payrolls is around the same as it was in February 2020.

Among industries, payrolled employment was generally rising in August 2021, but remained below pre-pandemic levels by as much as 6.0% in hospitality and 10.2% in arts and recreation.

Vacancies are above pre-pandemic levels, but the number of payrolled employees is yet to recover in some industries

Vacancies by selected industry, UK, December 2019 to February 2020 to June to August 2021, Index Jan-Mar 2020 = 100; Payrolled employment by selected industry, UK, February 2020 to August 2021, Index Feb 2020 = 100

Data for vacancies and payroll employees by selected industries (XLSX, 29KB)

The difference between the rate of growth in vacancies compared with payrolled employment may reflect the time it takes to fill jobs, as well as recruitment challenges.

In industries such as hospitality and arts and recreation, the number of employees on payrolls is rising, suggesting that vacancies are gradually being filled.

However, in the transport and storage industry, the number of people on payrolls is falling while vacancies are increasing. This suggests a gap between industry demand for workers and their availability.

Overall, the rise in vacancies is reflected by an increasing number of people starting new jobs.

There was a record net flow from unemployment to employment in April to June 2021, with more than twice as many people starting a job, having been unemployed, as those leaving a job (568,000 compared with 269,000, a difference of 299,000). This reverses the trend seen in the second and third quarters of 2020, when there were more job leavers than starters.

It is unclear whether people re-entering the labour market are doing so in the same sectors or not.

Similar to the overall trend in vacancies, data from Adzuna show that online job adverts are above pre-pandemic levels.

However, there is wide variation between regions.

By 10 September 2021, the number of online job adverts in the North East was 72% higher than in February 2020, but only 12% higher in London.

London has also seen a slower recovery in payrolled employment than other regions. The number of people on payrolls in London remained 1.8% lower in August 2021 than in February 2020, whereas at a national level it is now equal to pre-pandemic numbers.

Industry classification

The industry breakdown used for this analysis is based on the UK Standard Industrial Classification (SIC).

The shortened industry names used throughout the article correspond to the following full SIC names: