Labour Market Analysis | 20 April 2021


	Making learning and work count Labour market LIVE from Learning and Work Institute 20 April 2021 Unemployment is 1,675,000, down by 28,000 from last month’s published figure (quarterly headline is down by 50,000). The unemployment rate, 4.9%, has fallen by 0.1 percentage points on last month and is down by 0.1 percentage points on last quarter. The ONS figure for claimant unemployed is 2,673,700, up by 10,100 on last month, and the claimant rate is 7.3%. The number of workless young people (not in employment, full-time education or training) is 990,000, and has fallen by 11,000 on the quarter, representing 14.5% of the youth population (down by 0.1 percentage points). Youth unemployment (including students) is 575,000, down by 17,000 on the quarter. Vacancies in Jan-Mar 2021 have risen by 8,000 (in the ONS official series) to 607,000 after recovering strongly from the low point of 341,000 in April to June 2020. There are now 2.8 unemployed people per vacancy. The employment rate is 75.1% (up by 0.2 percentage points on last month’s published figure and fell by 0.1 percentage points in the preferred quarterly measure). Learning and Work Institute comment The labour market figures published on 20 April suggest that the labour market started to improve in February in preparation for the first stage of economy and society re-opening in March. Duncan Melville, Chief Economist at Learning and Work Institute, commented: ‘The headline labour market numbers from the Labour Force Survey (LFS) for the three months December 2020 to February 2021 are not especially positive. Compared to the three-month period September 2020 to November 2020 employment was down (by 73,000), and while unemployment was also down (by 50,000), working age inactivity was up (by 80,000) so people appear to be losing their jobs and exiting the labour market. Vacancy numbers for January to March were up only very slightly. The best that can be said on the basis of these numbers is that after the tumultuous storms of the last year the seas are now calming. However, the single month LFS numbers paint a very different picture. Employment is up strongly in February (by 201,000), unemployment is down (by 50,000), and there was a notable fall in inactivity (by 125,000). The number of hours worked in the economy were also up in February compared to January. Vacancy numbers were up strongly in March, as were the Adzuna figures for online job adverts. Finally, redundancy numbers approximately halved to around 120,000 in February from around 250,000 in January, as they did for the three months December 2020 to February 2021 compared to the previous three months September to November 2020 to 204,000 from 395,000. It is differences in timing that explain these two very different sets of numbers. The headline three-month numbers cover December to February which includes the period of the third lockdown and is compared against the September to November period, when in the earlier two months at least there were less pandemic related restrictions on the economy. Hence, it is perhaps not surprising that these are not particularly positive. The positive monthly numbers for February and March point to an improving labour market in anticipation of the removal of pandemic related restrictions in March and April. One puzzle in today’s numbers was the surprising fall in HMRC payroll numbers for March, down by 56,000 on February. Looking more closely at this data reveals that this fall is HMRC numbers is driven by a large jump in outflows up by 41 percent compared to February. Inflows of new employees also rose in in the month by 18 percent. There are two obvious potential explanations as to what is going on here. One is that the jump in outflows reflects a rise in redundancies in March perhaps caused by the Government only announcing the latest extension to the Coronavirus Job Retention Scheme in the March budget too late to prevent employers from laying off workers, a repeat of what happened last autumn. Perhaps there were very different things happening in different parts of the economy. Those sectors for whom the opening up in April matters most are expanding jobs, while other sectors are making people redundant. The trouble is that the payroll data by industry does not support this theory. The two sectors showing the largest falls in payroll numbers in March were wholesale and retail, and accommodation and food services, the very two sectors who should have been gearing up for the economy re-opening. Neither did we see a jump in the March claimant count numbers, which rose only slightly, and which would have been expected had redundancies surged. The alternate explanation is that this surprise fall in payroll numbers reflected smaller firms sorting out their payroll data returns with HMRC as the end of the financial year loomed. However, the problem with this data cleaning explanation is that no similar jump in payroll outflows is seen in the numbers in March in previous years. The payroll numbers for March remain a genuine puzzle’ Employment has fallen by 73,000 between September 2019 to November 2020 and December 2020 to February 2021. In the last 12 months employment decreased by 643,000. Unemployment is down by 50,000 between September 2019 to November 2020 and December 2020 to February 2021 and the unemployment rate decreased by 0.1 percentage points to 4.9% in the quarter. Economic inactivity has risen by 80,000 between September 2019 to November 2020 and December 2020 to February 2021 and the inactivity rate increased by 0.2 percentage points to 20.9% in the quarter. The national claimant count rose by 10,100. Youth unemployment decreased by 17,000. There are 575,000 unemployed young people, and 380,000 (5.6% of the youth population) who are unemployed and not in full-time education. Self-employment reduced by 715,000 this year. The number of employees is up by 133,000 over the year. Involuntary part-time employment rose by 11,000 this quarter to 1 million, 12.9% of all part-time workers.The highest since 2016.
	Chart 1: UK unemployment (ILO) The latest unemployment rate fell by 0.1 percentage points to 4.9%.
	Chart 2: The claimant count and UK unemployment compared The number of unemployed people who are claiming unemployment-related benefits is now 2,673,700, which is 998,700 higher than the number of unemployed in the official measure.
	Chart 3: Youth unemployment The number of unemployed young people fell by 7,000 since last month’s figures, to 575,000. Meanwhile, the number of young Universal Credit or Jobseeker’s Allowance claimants fell last month by 19,400, to 504,200.
	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 (990,000) decreased by 11,000 in the last quarter, or 1.1%. The fall was among the unemployed, with the number of economically inactive young people not in full-time education or training rising.
	Chart 5: Youth long-term unemployment (six months and over, 16-24) Youth long-term unemployment (which can include students) has risen by 30,000 over the last quarter and is now 220,000.
	Chart 6: Adult long-term unemployment (12 months and over, 25+) Adult long-term unemployment on the survey measure is now 261,000, up 0.1% on the previous quarter, and 9.8% 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 long-term unemployment numbers 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, if so they would have come back into the figures.
	Chart 7: Unemployment rates by age The 18 to 24 year old unemployment rate (including students) is 12.8% of the economically active – excluding over one million economically inactive students from the calculation. The rate for those aged 25 to 49 is 3.5%. For those aged 50 and over it is 3.9%. In the quarter, there was a fall of 0.4 percentage points for 18 to 24 year olds, and a rise of 0.3 percentage points for 25 to 49 year olds, and a rise of 0.1 percentage points for 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 2.3 percentage points higher than in February 2020. The change for those aged 25 to 34 is 0.5. 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 0.1. Chart 9: Vacancies – whole economy survey Headline vacancies this month rose by 8,000 to 607,000. The ONS' experimental single-month vacancy figures increased by 81,000 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, the annual change in thousands of vacancies.
	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 13: Online vacancies to early March from Adzuna Job vacancies dropped to below half of the 2019 average following lockdown. ONS analysis suggests that it was this reduced hiring that led to falls in employment, rather than increased job loss. There has been a gradual increase as the lockdown has eased, and the number of online vacancies captured by Adzuna at the start of April has now reached February 2020 levels.
	Chart 14: UK employment Employment has risen by 56,000 on the figure published last month, to 32,430,000. The chart shows both the official figures and the experimental weekly figures. The trend is likely to be upwards, with employers planning for the March initial reopening in the last weeks of February.
	Chart 15: Employment rate in the UK The quarterly change in the employment rate showed a fall of 0.1 percentage points, to 75.1%. The chart shows both the official figures and the experimental weekly figures. The trend is likely to be upwards due to reopenings.
	Chart 16: 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, there is a sharp fall.
	Chart 17: 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.
	Chart 18: 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. People not looking for a job because they are waiting to start a job they have been offered (as is likely to happen as firms reopen) are included in this group.
	Chart 19: Employment rate annual change in regions – February 2020 to February 2021 This quarter, no regions showed an annual rise in the employment rate, with Yorkshire and the Humber showing the smallest fall. The employment rate fell in all regions, with the largest annual falls in Northern Ireland, the South West and London.
	Chart 20: Unemployment rate annual change in regions – February 2020 to February 2021 This quarter, all regions showed a rise in the unemployment rate, led by London and Northern Ireland. The smallest rises were in the North East, Yorkshire and the Humber and the Eastern region.
	Chart 21: Inactivity rate annual change in regions – February 2020 to February 2021 This quarter, 10 regions showed a rise in the inactivity rate, led by the Northern Ireland and the South West. The inactivity rate fell very slightly in 2 regions, Wales and Yorkshire and the Humber.
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