Liam Halligan: Has lockdown made Britain work-shy?

Now, the employment numbers were published this morning – and it is good news.

The number of employees on UK payrolls recovered to pre-pandemic levels in August, according to new figures from the Office for National Statistics.

A rise of 241,000 last month took the number of us in paid work to 29.1 million, around the same level as in February 2020 – prior to any form of lockdown and when most of us had thankfully never heard of Covid. It seems so long ago.

Booming jobs numbers are a welcome sign the economy is finally getting back into gear. But the data also points to something else, a problem which, unless it is tackled, could seriously hold the economy back, jeopardising growth, further weakening our public finances and sending the cost-of-living soaring.

For the number of job vacancies climbed between June and August to a new record high, hitting a million for the first time. Over the last quarter, every sector of the UK economy has posted more vacancies with hospitality - bars, restaurants and hotels - and manufacturers suffering most – along with the transport sector, of course, given the chronic shortage of road hauliers.

Now, here are the UK vacancy numbers climbing above a million during the last three months, this graph published by the ONS this morning. Vacancies were little more than half a million back in 2003 – and around 800,000 just before the pandemic.

Now, as the demand for labour rises, the price of labour – wages go up. And wages did rise – by a stonking 8.3% if you take the May to July numbers and compared them to the same three months in 2020.

Now rising wages are a double-edged sword. One person’s pay rise is another person’s bigger wage bill, which then feeds into higher prices for goods and services, driving inflation – hitting everyone with a higher cost of living.

And it can be a real problem if, as wages go up, vacancies also stay high – with less labour coming forward to take those jobs. That’s can turn inflation into a serious problem, as well as stymying growth. And that seems to be what’s happening – given last Fridays GDP growth number of just 0.1pc in July, suggesting the economy has stalled.

Why are vacancies so high? A skills shortage, the ongoing furlough scheme? Or could it be something else?

So that’s the On the Money question for today. Sky high UK vacancies. Is it because lockdown has made us work shy?