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Labour market LIVE from Learning and Work Institute
15 July 2021


  • Unemployment is 1,637,000, the same as last month’s revised figure (quarterly headline down by 68,000) and the unemployment rate 4.8%, the same as last month's revised figure and down by 0.2 percentage points on last quarter (revised).
  • The ONS figure for claimant unemployed is 2,322,200, a drop of 114,800 on last month, and the claimant rate is 5.8%.
  • The number of workless young people (not in employment, full-time education or training) is 892,000, and fell by 39,000 on the quarter, now representing 13.1% of the youth population (down by 1.4 percentage points).
  • Youth unemployment (including students) is 539,000, down by 41,000 on the quarter.
  • Vacancies in Apr-Jun 2021 rose 96,000 (in the ONS official series) to 862,000 after recovering strongly from the low point of 340,000 in April to June 2020.
  • There are now 2.1 unemployed people per vacancy.
  • The employment rate is 74.8% and has risen by 0.1 percentage points on last month’s revised figure and is also up by 0.1 percentage points in the preferred quarterly measure.

Learning and Work Institute comment

The labour market figures published on 15 July clearly indicate that the labour market recovered strongly in May but with more modest improvement for the three months to May as a whole. Data revisions back to the start of 2020 suggest that the pandemic has resulted in greater damage to the labour market and so society than previously thought.

Duncan Melville, Chief Economist at the Learning and Work Institute, commented:

‘The headline numbers from the Labour Force Survey (LFS) released today point to a modest improvement in the labour market in March to May compared to the previous three months. Employment increased modestly (by 25,000) in the quarter, and while unemployment fell more substantially in the quarter (by 68,000), this was not due just to rising employment but also by exits from the labour market as working age inactivity rose in the quarter (by 38,000).

A much more positive view emerges for the month of May alone. The monthly LFS data for May records a substantial increase in employment of 171,000, a large fall in unemployment of 144,000 and a fall in working age inactivity of 23,000. This positive picture is supported by the HMRC payroll data which showed the number of employees up by 212,000 in May, a large fall in the claimant count of 151,000, and strong growth in vacancy numbers both according to the ONS’s monthly numbers and the Adzuna online job adverts.

Data suggests that the labour market recovery continued into June with HMRC payroll numbers up by a massive 356,000 in the month more than ten times the average monthly increase seen in the pre-pandemic period. The claimant count also fell very substantially by 115,000 in June. However, the growth in ONS vacancies in June was lower than those seen in the previous three months, and the number of on-line job adverts reported by Adzuna started to level off in June. This suggests that the rate of expansion in the labour market has decelerated in July.

While the above is very positive it should be noted that the impact of the pandemic is not over. Employment according to the LFS is still over 800,00 lower than it was in January to March 2020 and this fall itself would have been much higher if it had not been for furloughing. As the Coronavirus Job Retention Scheme winds down and ends in September we can expect a further fall in employment and a rise in unemployment.

‘The past is a foreign country; they do things differently there.’ The ONS has revised the LFS back to the start of 2020. This reflects a reweighting of the survey responses to new population estimates. This ‘new history’ gives markedly different results for employment and working age inactivity but has much less impact on levels of unemployment.

Employment contracted between January to March 2020 and November 2020 to January 2021 and has risen since. The ONS previously reported that employment fell by 631,000 in this contraction phase and then rose by 113,000 up to February to April 2021, with an overall fall between March to January 2020 and February to April 2021 of 518,000. The new revised numbers are noticeably worse. Employment is now estimated to have fallen by 899,000 in the contraction phase and subsequently to have risen by just 61,000 with an overall fall of 838,000 between January to March 2020 and February to April 2021.

This larger fall in employment has very largely been reflected in higher economic inactivity rather than higher unemployment. The rise in unemployment between January to March 2020 and February to April 2021 has been revised to 262,000 only slightly higher than the previous estimate of 247,000. In contrast, there has been a substantial upward revision to the rise in working age economic inactivity between March 2020 and February to April 2021. Previously the ONS posited a rise of 269,000. This has been revised to a rise of 370,000.

Overall, what emerges from the revised data is that the pandemic has resulted in a considerably larger loss of employment than was previously thought and this has been reflected much more in people leaving the labour market than in people becoming unemployed and searching for work. Once people have left the labour market it can be much harder to help them back into work than if they continue to be unemployed and searching for work.

Hence, the revised data indicate that the labour market costs of the pandemic have been much higher than we had previously thought, and the challenge government policy faces in addressing these costs is larger than we had thought. Perhaps statistics as well as economics is now a dismal science.

One conundrum that remains after these revisions is the contrast between the LFS and HMRC payroll data for employee numbers. The revised LFS numbers now show a small fall in employee numbers of 69,000 between January to March 2020 and February to April 2021 rather than the previous estimate of a rise of 146,000 but both numbers are miles apart from the HMRC payroll numbers which suggest a fall of 832,000 over this period.

Paul Bivand, Associate Director for Statistics and Analysis at the Learning and Work Institute said:

"The ONS has revised the figures back to the beginning of 2020 this month because it was becoming evident that the population projections they had used to gross up the sample responses were wrong. Much of this is due to apparent falls in the numbers of EU born workers, which could have been due to people actually leaving or being less likely to answer the survey when it moved to telephone from face to face interviewing. The change that ONS has implemented uses the change in HMRC employee numbers. Because ONS are using the change in HMRC estimates, the number of LFS employees and the HMRC total are unlikely to converge.

ONS will, in the future, revise these figures again, when the census figures have been published, and they have a clearer idea on population movements over the course of the pandemic."

Employment increased by 25,000 between December 2020 to February 2021 and March to May 2021. In the last 12 months employment has fallen by 526,000.

Unemployment decreased by 68,000 between December 2020 to February 2021 and March to May 2021, and the unemployment rate has fallen by 0.2 percentage points to 4.8% in the quarter. In the last year, unemployment has risen by 222,000.

Economic inactivity is up by 38,000 between December 2020 to February 2021 and March to May 2021. and the inactivity rate is up by 0.1 percentage points to 21.3% in the quarter. In the last year, inactivity has risen by 197,000.

The national claimant count fell by 114,800.

Youth unemployment was down by 41,000. There are 539,000 unemployed young people, and 357,000 (5.2% of the youth population) who are unemployed and not in full-time education.

Self-employment fell by 514,000 this year. The number of employees is up by 23,000 over the year. Involuntary part-time employment fell by 12,000 this quarter to 1.0 million, 13.1% of all part-time workers.

Chart 1: UK unemployment (ILO)

The latest unemployment rate stayed at a revised 4.8%.

chart 1
Chart 2: The claimant count and UK unemployment compared

The number of unemployed people who are claiming unemployment-related benefits is still 685,600 higher than the number of unemployed in the official measure.

chart 2
Chart 3: Youth unemployment

The number of unemployed young people has risen by 4,000 since last month’s revised figures, to 539,000.

Meanwhile, the number of young Universal Credit or Jobseeker’s Allowance claimants fell last month by 22,200, to 441,200.

chart 7
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 (892,000) fell by 100,000 in the last quarter, or 10.0%. The fall was largely among the inactive, with the number of unemployed young people not in full-time education or training falling more slowly.

chart 6
Chart 5: Youth long-term unemployment (six months and over, 18-24)

Youth long-term unemployment (which can include students) has decreased by 4,000 over the last quarter and is now 218,000. Since December-February 2020, youth long-term unemployment has risen 49% (72,000).


chart 3
Chart 6: Adult long-term unemployment (12 months and over, 25+)

Adult long-term unemployment on the survey measure is now 343,000. Since December-February 2020, adult long-term unemployment has risen 44% (105,000).

chart 4
Chart 7: Unemployment rates by age

The 18 to 24 year old unemployment rate (including students) is 11.6% of the economically active – excluding 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 3.6%. The quarterly change is down 1.5 percentage points for 18 to 24 year olds, no change for 25 to 49 year olds, and down 0.3 percentage points for the over-50s.

chart 5
Chart 8: Employment rate changes by age (counting February 2020 as 100)

The 18 to 24 year old unemployment rate (including students) is 1.1 percentage points higher than in February 2020. The change for those aged 25 to 34 is 0.9. The change for those aged 35 to 49 is 1.0. The change for those aged 50 to 64 is 0.7 The change for those aged over 65 is 0.6.

chart 5


Chart 9: Vacancies – whole economy survey


Headline vacancies this month rose by 96,000 to 862,000. The ONS' experimental single-month vacancy figures rose by 301,000 In the last quarter. The headline ONS vacancy figure is both seasonally adjusted and a three-month average. The chart shows both series.

chart 13
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, the annual change in thousands of vacancies.

chart 13
Chart 11: Unemployed people per vacancy

There are 2.1 unemployed people per vacancy. This has fallen back as the number of vacancies has risen, despite the large number of unemployed.

chart 14
Chart 12: Online vacancies to early July from Adzuna

Job vacancies dropped to below half of February 2020 level following lockdown. There had been a substantial increase as the lockdown had eased, with the number of vacancies now being 129% of the February 2020 level. The figures are to the 9th July, and show a small fall on last week's record levels.

chart 14
Chart 13: UK employment

Employment has risen by 6,000 on the figure published last month, to 32,180,000. The chart shows both the official figures and the experimental weekly figures. The trend is likely to be upwards.

chart 15
Chart 14: Employment rate in the UK

The employment rate increased by 0.1 percentage points over the quarter, to 74.8%. The chart shows both the official figures and the experimental weekly figures. The trend is likely to be upwards.

chart 16
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. Since the pandemic started, this number has risen by 35,000.

chart 17
Chart 16: Economic inactivity – people looking after family

The survey figures (showing those looking after family) and not doing paid work or looking for paid work have been trending downwards. Since the pandemic started, this number has fallen by 215,000.

chart 18
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. Since the pandemic started, this number has risen by 136,000.

chart 18
Chart 18: Employment rate two-year change in regions – March to May 2021

One region showed a rise in the employment rate, the North East. The employment rate fell in 10 regions, led by the East Midlands and the South West.

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Chart 19: Unemployment rate two-year change in regions – March to May 2021

10 regions showed a rise in the unemployment rate, led by London and the South East. The unemployment rate fell in no regions.

chart 20
Chart 20: Inactivity rate two-year change in regions – March to May 2021

9 regions showed a rise in the inactivity rate, led by the South West and Wales. The inactivity rate fell in 3 regions, led by London and the West Midlands.

chart 21

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If you have any questions, contact Paul Bivand
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