Royal Mail PLC (LSE:RMG) is looking to hire around 20,000 temporary workers to support higher demand during the Christmas period, which will go from late October through to early January.

The delivery services provider is just the last UK firm launching massive recruitment drives for the festive season, with grocer J Sainsbury PLC (LSE:SBRY) hiring 22,000 people, Inc 20,000, John Lewis Partnership 7,000 and Wm Morrison Supermarkets PLC (LSE:MRW) ‘only’ 3,000 staff.

READ: Royal Mail makes GBP210mln swoop for Canadian freight carrier

The UK is currently grappling with a massive labour shortage: a report from the Recruitment and Employment Confederation (REC) and KPMG showed a near-record fall of candidate availability last month.

Coupled with growing demand from employers, the result was an increase in pay.

However, economists at Pantheon Macroeconomics reckon the labour shortage will improve in the coming months.

Furlough rates remain high at small businesses, who lack the financial muscle to bring all staff back, with 70% of all those still furloughed in August probably will return to their former employers.

A bit less than half of those that have been fired at the end of the furlough scheme likely will find a new job within three months, in line with pre-Covid norms.

“We expect the unemployment rate to rise only to 5.0% in the fourth quarter, from 4.5% in the third quarter. But underemployment likely will soar, as people return on fewer hours than they want. Given that these people will endure a drop in pay, as the government won’t be paying their non-worked hours, we expect many of them to look for a new job,” said economist Samuel Tombs.

“As a result, widespread labour shortages should be a thing of the past soon… Hours worked in the fourth quarter will be about 3% below their potential, given that unemployment will have risen and many ex-furloughed part-timers will be seeking full-time work. This should ensure that wage growth is subdued even as inflation rises over the next six months.”

Shares in Royal Mail were flat at 412.8p on Friday afternoon.

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