London jobs are settling below pre-Covid-19 levels, says recruitment portal

LONDON – London vacancies are set to remain below pre-Covid-19 levels, lagging behind the rest of Britain 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 in 2023, according to data from recruitment site Indeed.

Outside of south-east England, all other British regions are seeing new jobs at or even surpassing pre-Covid-19 numbers. 

London vacancies are “never going to get back” to above levels seen in February 2020, said Mr 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,” Mr Kennedy added. “Unless it completely goes back to five days a week in the office, then we’re 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 has 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 like Amazon in the budget on Oct 30.

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-19 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 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 Oct 28 by Lloyds’ Business Barometer showing hiring intentions picking up in October. That is 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 British 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 Mr 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-19 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 return-to-office policies could be met with resistance, a separate KPMG study showed in 2023.

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’s white-collar workers head into the office every day, the lowest proportion in any British region and more than 10 points below the national average, according to a Hays survey of more than 10,000 staff and employers.

London’s return to office also lags 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 like retail, hospitality, leisure,” said Mr Kennedy.

“The impact is being felt by jobs in those sectors in big urban areas that rely on that spending.”
BLOOMBERG