Labour Market Analysis | 23 March 2021


	Making learning and work count Labour market LIVE from Learning and Work Institute 23 March 2021 Unemployment is 1,703,000, and has fallen by 41,000 from last month’s published figure (quarterly headline has risen by 11,000) and the unemployment rate 5.0%, decreased by 0.1 percentage points on last month and has risen by 0.1 percentage points on last quarter. The ONS figure for claimant unemployed is 2,682,800, up by 86,600 on last month, and the claimant rate is 7.5%. The number of workless young people (not in employment, full-time education or training) is 1,004,000, increased by 5,000 on the quarter, representing 14.7% of the youth population (no change ). Youth unemployment (including students) is 582,000, is down by 15,000 on the quarter. Vacancies in December to February 2021 fell 3,000 (in the ONS official series) to 601,000 after recovering strongly from the low point of 343,000 in April to June 2020. There are now 2.8 unemployed people per vacancy. The employment rate is 75.0% (no change on last month’s published figure and reduced by 0.3 percentage points in the preferred quarterly measure). One year on: Labour market impacts of coronavirus and priorities for the years ahead This morning, we have published our new ‘One year on’ report. This shows the labour market impact of coronavirus over the last year, its unequal impacts, and priorities for the years ahead to increase employment, reduce inequalities and support incomes. Explore the full report. Learning and Work Institute comment The labour market figures published on 23 March suggest that the labour market may be starting to stabilise, but the long-term negative consequences of the pandemic will be with us for years to come. provide . Duncan Melville, Chief Economist at Learning and Work Institute, commented: ‘At first sight today’s numbers suggest a substantial downturn in the labour market in the three months from November 2020 to January 2021. The headline quarterly change numbers for employment, unemployment, and economic inactivity from the Labour Force Survey (LFS) show a substantial fall in employment (down 147,000), a small rise in unemployment (up 11,000) and a substantial rise in economic inactivity (up 108,000). So, it would appear that large numbers of people have lost their jobs and quit the labour market in consequence. But look at the monthly LFS data and the picture is entirely different. Between December and January employment is up substantially (by 220,000), unemployment is down (by 39,000) and people are entering the labour market with inactivity down substantially (by 93,000). It should be noted that the large rise in employment in January followed a substantial fall in December, so there may be more noise than signal in these monthly numbers. Some other pieces of information may help us to understand what is going on: Total hours worked were broadly flat at around 950 million in January. HMRC payroll numbers were up in January and today’s data showed they rose again in February – the third consecutive monthly increase. The latest vacancy numbers relate to February 2021 and the monthly figures show these have been broadly flat since November 2020. The Adzuna online job adverts’ data suggest that vacancy levels increased in March 2021. The number of redundancies fell in both the November 2020 to January 2021 quarter and in January compared to December. Advance notifications by employers to the Insolvency Service of intentions to undertake redundancies also fell in January suggesting this trend is set to continue. The claimant count rose by 87,000 in February but a longer perspective suggests that the claimant count has fluctuated around a flat trend since May 2020. Overall, the safest conclusion is that the labour market is, as The Raconteurs might say in ‘Steady as she goes’ mode. A period of turbulence is starting to be followed by something that is beginning to look more stable. While this is positive news, it is also clear that the pandemic will continue to have adverse consequences for years to come. Long-term unemployment (12 months plus) has risen by more than a third (37 percent) in the last six months. Even more worryingly, youth long-term unemployment (6 months plus) has risen by almost two-thirds (64 percent) over the same period. There is a significant body of research showing that youth unemployment can have very long lasting adverse scarring effects on individuals’ subsequent chances of being in work and, on their wage levels when in work with some studies showing wage impacts lasting for more than twenty years. Employees who have remained formally employed but furloughed who have not worked for an extended period and who subsequently lose their jobs may also struggle to return to work in similar ways to the long term unemployed. Alongside this rise in long term unemployment, the last couple of years, including pre-pandemic, have seen the largest and most sustained rise in inactivity due to long term sickness since the 1990s. Clearly, there will be a continued ongoing need for active labour market policies to help the long term workless, both unemployed and inactive, into work. ’ Paul Bivand, Assistant Director for Statistics and Analysis at Learning and Work Institute said: "ONS has been uncertain how robust the numbers (rather than rates) estimates have been, due to a large drop in responses from non-UK born workers. This month they have worked with HMRC to check HMRC's employee numbers (based on tax records) against whether they were a foreign national when they first got their National Insurance number. The result is that the ONS Labour Force Survey appears to have over-estimated the fall in non-UK workers. This is probably due to lower responses to telephone surveys in that group. Therefore, the estimates of labour market numbers from the Labour Force Survey may be more robust than had been feared, as the population base is unlikely to have dropped as had been suggested." Employment has fallen by 147,000 between August to October 2020 and November 2020 to January 2021. In the last 12 months employment fell by 611,000. Unemployment increased by 11,000 between August to October 2020 and November 2020 to January 2021 and the unemployment rate is up by 0.1 percentage points to 5% in the quarter the highest level since 2015. Economic inactivity is up by 108,000 between August to October 2020 and November 2020 to January 2021 and the inactivity rate has risen by 0.3 percentage points to 21.0% in the quarter. The national claimant count rose by 86,600. Youth unemployment reduced by 15,000. There are 582,000 unemployed young people, and 397,000 (5.8% of the youth population) who are unemployed and not in full-time education. Self-employment has fallen by 661,000 this year. The number of employees rose by 105,000 over the year. Involuntary part-time employment is up by 51,000 this quarter to 996,000, 12.7% of all part-time workers.
	Chart 1: UK unemployment (ILO) The latest unemployment rate fell by 0.1 percentage points to 5.0%.
	Chart 2: The claimant count and UK unemployment compared The number of unemployed people who are claiming unemployment-related benefits is now 980,000 higher than the number of unemployed in the official measure.
	Chart 3: Youth unemployment The number of unemployed young people is down by 8,000 since last month’s figures, to 582,000. Meanwhile, the number of young Universal Credit or Jobseeker’s Allowance claimants increased last month by 11,400, to 524,800.
	Chart 4: Young people not in employment, full-time education or training The number of out of work young people who are not in full-time education (1,004,000) reduced by 1,000 in the last quarter , or 0.1%.
	Chart 5: Youth long-term unemployment (six months and over, 18-24) Youth long-term unemployment (which can include students) has risen by 30,000 over the last quarter and is now 184,000. This is up 20% on the previous quarter, and 39% on a year before.
	Chart 6: Adult long-term unemployment (12 months and over, 25+) Adult long-term unemployment on the survey measure is now 262,000, up 2% on the previous quarter, and 11% on a year before. Those who lost their jobs with the first lockdown are not yet in these figures, though by now they will have passed the 12-month threshold. The fall in the first lockdown period of 2020 (April to June 2020) could be due to long-term unemployed people stopping looking for work at that time. Later, they then resumed looking for work and may have counted their unemployment from when they lost their job, missing out the lockdown period, so they came back into the figures later.
	Chart 7: Unemployment rates by age The 18 to 24 year old unemployment rate (including students) is 13.2% of the economically active – excluding over one million economically inactive students from the calculation. The rate for those aged 25 to 49 is 3.7%. For those aged 50 and over it is 3.8%. There was a fall of 0.1 percentage points for 18 to 24 year olds, and a rise of 0.1 percentage points for both 25 to 49 year olds, and the over-50s.
	Chart 8: Unemployment rate changes by age (counting February 2020 as 100) The 18 to 24 year old unemployment rate (including students) is 2.7 percentage points higher than in February 2020. The change for those aged 25 to 34 is 0.8. The change for those aged 35 to 49 is 0.9. The change for those aged 50 to 64 is 1.1 The change for those aged over 65 is now zero. Chart 9: Vacancies – whole economy survey Headline vacancies this month decreased by 3,000 to 601,000. The ONS' experimental single-month vacancy figures reduced by 16,000 In the last quarter. The headline ONS vacancy figure is both seasonally adjusted and a three-month average. The chart shows both series.
	Chart 10: Experimental single month vacancies – whole economy survey The Office for National Statistics experimental single month vacancy estimates include sectoral information. As these are not seasonally adjusted, it is better to look at annual changes. The numbers are thousands of vacancies, under each number, and on the right are the annual changes in thousands of vacancies. The annual falls in vacancies in the accommodation and food service sector and in retail are expected, but very large. They account for most of the total fall. Other sectors show small falls (except public administration and social security with a small rise). However, even with the very large falls in retail and accommodation and food service, vacancies exist and so they are still significant sectors for job catering.
	Chart 11: Unemployed people per vacancy There are 2.8 unemployed people per vacancy. This has fallen back as the number of vacancies has risen, despite increasing numbers of unemployed.
	Chart 12: Online vacancies to early March from Adzuna Job vacancies dropped to below half of the 2019 average following the first lockdown. ONS analysis suggests that it was this reduced hiring that led to falls in employment, rather than increased job loss. There had been a gradual increase as the lockdown had eased. The number of online vacancies captured by Adzuna at the start of March was 93% of February 2020 levels.
	Chart 13: UK employment Employment has fallen by 18,000 on the figure published last month, to 32,374,000. The chart shows both the official figures and the experimental weekly figures. The trend is likely to be downwards.
	Chart 14: Employment rate in the UK The employment rate is down by 0.3 percentage points over the quarter, to 75.0%. The chart shows both the official figures and the experimental weekly figures. The trend is likely to be downwards.
	Chart 15: Economic inactivity – the long-term sick or disabled The numbers of people who are economically inactive, that is, not working and not currently looking for work, who are long-term sick or disabled has been trending upwards. This month, we are showing the numbers of people in this group. The benefit figures are increasingly unfit for purpose due to Universal Credit statistics not identifying those who claim on health grounds. The UC statistics only identify clearly some of these (who are eligible for an additional payment).
	Chart 16: Economic inactivity – people looking after family The survey figures (showing those looking after family and not doing or looking for paid work) have been trending downwards.
	Chart 17: Economic inactivity – other inactive In the Coronavirus period, people who were not working or looking for work due to Covid were included in this group. The number in this category increased sharply at the time, and has continued at a high level. A very high proportion of this group want to work, and this increased over the period of the pandemic.
	Chart 18: Employment rate quarterly change in regions – November 2020 to January 2021 This quarter, one region showed a rise in the employment rate, Yorkshire & the Humber. The employment rate fell in 11 regions, led by the East Midlands and the South West.
	Chart 19: Unemployment rate quarterly change in regions – November 2020 to January 2021 This quarter, 11 regions showed a rise in the unemployment rate, led by London and the West Midlands. The unemployment rate shoed no change in the North East.
	Chart 20: Inactivity rate quarterly change in regions – November 2020 to January 2021 This quarter, 10 regions showed a rise in the inactivity rate, led by the North West and Northern Ireland. The inactivity rate fell in two regions, Yorkshire and the Humber and London.
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