London jobs are settling below pre-Covid levels: Indeed
LONDON vacancies are set to remain below pre-Covid levels, lagging behind the rest of the UK, after hybrid working trimmed demand for shop assistants and baristas near offices.
Job postings in the capital are stuck at 25 per cent below where they were just before the beginning of the pandemic, after a deterioration that began last year, according to data from the recruitment site Indeed. Outside of southeast England, all other UK regions are seeing new jobs at or even surpassing pre-Covid numbers.
London vacancies are “never going to get back” to above levels seen in February 2020, said Jack Kennedy, a senior economist at Indeed. While part of the slowdown in hiring could be reversed by improving economic conditions, some retail, hospitality and leisure jobs lost due to lower footfall might be gone forever.
“There is going to be a lasting headwind from hybrid working,” Kennedy said. “Unless it completely goes back to five days a week in the office, then we are gonna see a drag from that aspect, at least on the jobs in local services that used to rely on commuters and spending on all sorts of things.”
Fewer office workers splashing out on lattes and after-work pints is one among a long list of challenges that have scarred the hospitality sector in recent years. Hotels, pubs and restaurants had to lift wages and prices after they were disproportionately hit by the previous Conservative government’s policies, including two back-to-back big increases in the minimum wage, higher alcohol taxes and stricter limits on work visas.
That’s turned the services sector into the main concern in the Bank of England’s (BOE) fight against inflation, effectively prolonging the pain of high borrowing costs. Chancellor of the Exchequer Rachel Reeves is considering reducing taxes for shops, leisure and hospitality while raising bills for online giants such as Amazon in the budget on Oct 30.
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Resilient staff demand outside of London helps explain in part why wage growth remains too hot for BOE policymakers. While Indeed postings recovered to pre-Covid levels, official figures show labour force participation rates are still smaller than before the pandemic.
Overall, job vacancies in the first two weeks of October were already 3 per cent higher than in the same period in September, according to Adzuna data on Monday (Oct 28). If that pace is sustained for the full month, it could be the fastest month-on-month increase in postings since February 2022.
Stronger demand for staff was confirmed on Monday by Lloyds’ Business Barometer showing hiring intentions picking up in October. That’s despite its overall gauge of confidence falling to the lowest in four months.
Worries about tax rises are keeping businesses in ‘wait-and-see’ mode ahead of Labour’s budget on Oct 30. An S&P Global survey showed private-sector companies are still delaying large investments, with business sentiment dropping to the lowest level in almost a year.
While UK companies have so far avoided laying off workers despite a mild economic downturn, they have also put hiring on hold to cope with higher interest rates and more uncertainty. The Office for National Statistics said the overall number of vacancies fell across most sectors even as unemployment declined in the three months to August.
London vacancies are likely to be nearing their lowest point in the current downturn, according to Kennedy at Indeed. Declining borrowing costs and a brighter economic outlook could soon unlock hiring among employers in consulting, banking and finance. That would fill part – but not all, of the post-Covid gap.
Even though most finance bosses are planning to increase office attendance rules, only a third are eyeing four days in the office every week, according to a KPMG UK survey. And only 10 per cent of financial services employees prefer being in the office every day, suggesting even small tweaks to RTO policies could be met with resistance, a separate KPMG study showed last year.
The capital is seeing persistently higher levels of hybrid and remote working post-pandemic compared with the rest of the country. Fewer than 30 per cent of London white-collar workers head into the office every day, the lowest proportion in any UK region and more than 10 points below the national average, according to a Hays survey of over 10,000 staff and employers.
London’s return-to-office also lags behind other major global cities such as Paris, Singapore or New York. Londoners spend little more than half the week in the office, while workers in Paris, New York or Singapore go in more than three days every week, according to a study from the Centre for Cities. Still, hybrid working’s chilling effect on hospitality jobs is far from a London phenomenon.
“Capital cities across Europe tend to under-perform national economies given higher prevailing levels of work from home, lower commuter footfall, and less spending on things such as retail, hospitality, leisure,” Kennedy said. “The impact is being felt by jobs in those sectors in big urban areas that rely on that spending.” BLOOMBERG
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