Tomas Key

During the recovery from the Covid pandemic, the demand for workers rose to unprecedented levels in the UK. The number of jobs that firms were looking to fill increased to 1.3 million in the middle of 2022, 60% higher than the level in the past three months of 2019. The amount of job vacancies has fallen substantially over the past year, but remains at a high level. This post discusses how those changes to the demand for workers have affected the unemployment rate. In particular, it outlines how an equilibrium model of the labour market can help to explain why there appears to have been a change to the relationship between job vacancies and unemployment in recent years.